FANews
FANews
RELATED CATEGORIES

Does the legend of Robin Hood live on ?

01 April 2008 FAnews

In the article, "Who killed our modern day Robin Hood's spirit?", published in April last year, we compared outgoing PFA Vuyani Ngalwana to 'Robin Hood', championing the cause of the downtrodden in the pension industry. This year we take a look at some rulings by the new PFA Mamodupi Mohlala and ask if she can fill Vuyani's shoes?

Vuyani Ngalwana took the life industry by storm. He rocked the boat, made waves that rippled through the industry and gave the man on the street hope of standing a chance against the corporate giants that control the industry. The media and the public loved Vuyani and one could be excused for thinking he was simply worked out of the system because of his 'unpopular' decisions. Some commentators even stated that his role was really to increase consumer awareness, since almost all his rulings were labelled "landmark rulings" and many were successfully appealed against.

The new PFA

Shortly after Vuyani's departure, a new PFA was appointed, this time a young woman, Mamodupi Mohlala. The first few months of her tenure were fairly quiet = but it did not take her too long to start making some waves of her own. While her intentions seem to be to take up the cause of the consumer = much like our 'Robin Hood' Vuyani = some of her decisions have proved unpopular with different segments of the market. It would seem that stepping into the role of people's hero is not that easy.

Controversial rulings

Two landmark rulings stand out. The first one was the divorce case of Cockcroft vs The Employees Pension Fund. Mohlala held "that the new amended provisions (as promulgated in the Pension Funds Amendment Bill) applied to all divorces whether concluded prior to or after 13 September 2007." The ruling held that the complainant should receive the pension fund money from her ex-husband's fund when the divorce is finalised, and not when the husband retires. But Mohlala jumped the gun in holding that the law applied retrospectively.

Misguided intentions ?

Mohlala reasoned that amended provisions were clearly designed to remedy the previously unfair position of nonmember spouses in respect of the payment of divorce benefits. It would hardly make sense to only address this flaw in respect of new cases. Thus it appears that the PFA's decision was in the interest of fairness to all non-member spouses, regardless of the date of divorce. Unfortunately Vuyani's impeccable ability to cover all bases was absent. The ruling caused uproar amongst industry players with one reader commenting on FAnews Online that "sadly, this is another case where the ruling and its implications were NOT thought through properly, nor investigated."

Another FAnews Online reader pointed out the ruling would exacerbate the problem of poor savings in the industry and that the influence of the divorced spouse's withdrawal on the end value of the fund was not fully investigated. The reader questioned whether the PFA acted responsibly and in the best interest of the consumer when she ruled that the spouse could choose to withdraw the cash instead of transferring it to another fund.

Whose interests are being protected ?

In a more recent ruling = AK Kokwa vs Corporate Selection Retirement Fund (First Respondent) and Liberty Life (Second Respondent) = Mohlala ruled that a minor child's caretaker should get the R62 000 due to the child after
both her parents died. The trustees originally determined that the money should be paid into a trust from which the caretaker would receive a monthly payment to look after the minor.

It is not clear in whose interests this ruling was made. Firstly, the money will certainly not last long in the hands of the caretaker, however well intentioned he or she may be. Secondly, should the caretaker squander the money, there is no protection for the child, who will clearly suffer the consequences. Thirdly, as another reader pointed out, the caretaker has no legal responsibility to look after the child. "So if the caretaker passes away or disappears with the money, there could be a comeback to the trustees."

The ruling was called short-sighted, among other things, with many of our readers saying that if the PFA made such rulings, "the PFA's Office should be made to sign as surety for the minor" and the PFA herself should "stand in for the minor in the event of the caretaker squandering the money or using it for his or her own means".

Breaking new ground

It must be said that the PFA is doing groundbreaking work with every case. Like the FAIS Ombud, Mohlala does not have a host of cases and determinations on which she can lean as precedents for her decisions. Even her own decisions are not legal precedent and the legal issues must be reconsidered from scratch every time a case is heard. At best, the PFA's determinations will serve as a likely approach to cases in the future, but no precedents are created. As Mohlala herself said, this results in the trustees of pension funds 'wasting the resources of the adjudicator's office by not applying their minds' and bringing cases that could have been solved by the funds or the employers to the PFA.

A delicate balance

Although many of Mohlala's rulings have met with industry and consumer approval, it's that single ill-considered ruling that has a huge impact on people's lives. Vuyani's uncanny ability to balance consumer-focused rulings with a very comprehensive insight regarding the consequences of his actions and the impact thereof on the various role players is sadly lost to the industry.

Perhaps the authorities should take some of the blame for doing away with a PFA who, though he made waves, did so faultlessly. They left enormous shoes to fill and we can only hope that Mohlala eventually follows Vuyani's example in championing human rights and becoming the next 'Robin Hood' of the pension funds industry.

Quick Polls

QUESTION

How confident are you that insurers treat policyholders fairly, according to the Treating Customers Fairly (TCF) principles?

ANSWER

Very confident, insurers prioritise fair treatment
Somewhat confident, but improvements are needed
Not confident, there are significant issues with fair treatment
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now