By: Brett Ladouce
With the Savings Pot withdrawals reaching the R21 billion mark, of which Sars probably pocketed more than R4 billion, it might be time to focus our attention on other important matters relating to our pension and provident funds.
The Office of the Pension Funds Adjudicator recently published its integrated report for 2023-2024. During the reporting period, 9 177 complaints were received, and 9 719 complaints were finalized. More than 50% of complaints were related to withdrawal benefits, 32% were regarding the non-payment of contributions by employers, about 7% were related to the allocation of death benefits, and only 1% were related to retirement benefits. The Office of the Pension Funds Adjudicator reported significant determinations made regarding the non-payment of contributions by employers and the payment of death benefits.
Failure to pay contributions:
In JL Makhubela v The Private Security Sector Provident Fund and Another (MP/00092450/2022) the Adjudicator ruled that the employer is liable for fund contributions from the date on which the employment contract started and not from the date when the employer decides to register the employee at the fund. The employer was ordered to pay outstanding employer contributions from the date of employment and not only from the later date of registration of the employee as a member of the fund. Employers are therefore not allowed to decide when they want to become liable for the payment of fund contributions by delaying the registration of an employee as a member of the fund as employees automatically become members of the fund from the day they start to work for the employer.
The Adjudicator in National Fund for Municipal Workers v Masilonyana Local Municipality and another (GP/00094564/2022); National Fund for Municipal Workers v Tokologo Local Municipality and another (WC/00094589/2022) and National Fund for Municipal Workers v Dr Beyers Naude Local Municipality and Another held the employers and municipal managers jointly and severally liable for the payment of outstanding contributions plus late payment interest. Section 13(8) of the Pension Funds Act allows a fund to hold the persons who are involved in the management of the employer’s financial affairs accountable, and possibly personally liable, for the payment of outstanding fund contributions. These rulings will hopefully decrease the level of non-compliance of employers in relation to the payment of fund contributions.
The duties of the fund and its administrator to keep proper records of the receipt and allocation of contributions were put under the spotlight in ZS Ngcime v Private Security Sector Provident Fund (WC/00091692/2022). The Adjudicator found that the failure of the fund and its administrator to allocate contributions received from the employer to members amounted to a contravention of section 7C(1) of the Pension Funds Act which states that the board of trustees of the fund must direct, control and oversee the operations of the fund. The onus is therefore on the employer to ensure that the correct contributions that are due in terms of the rules of the fund are paid to the fund when it is due and payable, and it is the responsibility of the trustees and administrator of the fund to allocate the contributions correctly to each fund member account.
Allocation of death benefits:
In M Tshikhudo v Metal Industries Provident Fund (GP/00100796/2023), the fund was informed of the death of the member in August 1996, but the fund had up to date of the complaint not made any effort to trace all the dependants of the deceased member. The Adjudicator found that although the fund has a 12-month period within which to trace and identify possible beneficiaries that might share in the benefit, the death benefit must be allocated and distributed without any undue delay, and any delay must be reasonable and justifiable. It was found that the board of trustees of the fund did not make any effort to trace two of the beneficiaries. The board of trustees thus failed to conduct a proper investigation within a reasonable time. It is important for trustees to allocate and distribute death benefits without delay to ensure the dependants of deceased members do not suffer due to a lack of resources.
In N Krishna v Mondi Mpact Group Fund Provident Section (KN/00099138/2023), the fund declined to pay out a death benefit when a member went missing, and no death certificate was issued regarding his death. The Adjudicator found that the fund was correct in not paying out a benefit without a presumption of death order being issued by a court in relation to the missing member.
The Adjudicator in E Van Staden obo E/L WS Smit v PSG Wealth Retirement Annuity Fund (WC/00100833/2023) held that where a beneficiary was excluded from receiving a benefit in terms of a civil court order, the fund cannot delay the allocation of a death benefit until the conclusion of a criminal case against the beneficiary who is accused of murdering the deceased member. The Adjudicator ordered the fund to exclude the specific beneficiary from the death benefit allocation process and to proceed with the allocation of the death benefits to the other beneficiaries of the member. A criminal conviction in relation to the causing of the death of the member is therefore not a requirement for the exclusion of a beneficiary.
The Office of the Pension Funds Adjudicator has become a valuable source of direction and legal certainty for the retirement fund industry as well as a valuable source of free assistance and support to help ordinary fund members and beneficiaries settle fund-related disputes. Let us take today to celebrate the achievements of this effective and efficient institution, and, as human nature dictates, start complaining about its 99 problems tomorrow.
* * Ladouce is a pension funds lawyer and the author of the book, Pensions for Palookas.
PERSONAL FINANCE