De­lays in pen­sion fund pay­outs dom­i­nate com­plaints to ad­ju­di­ca­tor

SE­CU­RITY FUND A HEADACHE TRANS­FER DE­LAYS

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The vast ma­jor­ity (about 70 per­cent) of com­plaints to the Pen­sion Funds Ad­ju­di­ca­tor are about the de­layed pay­ment or short-pay­ment of ben­e­fits to re­tire­ment fund mem­bers who re­sign from their funds, ei­ther on leav­ing their jobs or on dis­missal, ac­cord­ing to the ad­ju­di­ca­tor’s an­nual re­port for the pe­riod ended March 31, 2016. The sec­ond most com­mon cause of com­plaints (about 10 per­cent) is death ben­e­fits.

These per­cent­ages have not changed much in the past two years, although the num­ber of com­plaints rose al­most 38 per­cent – to 9 667 – com­pared with the pre­vi­ous year. The com­plaints re­ceived roughly equalled the num­ber of com­plaints fi­nalised (9 970) by the ad­ju­di­ca­tor’s of­fice dur­ing the 12-month pe­riod, and the of­fice is­sued 3 476 de­ter­mi­na­tions (up by al­most 21 per­cent).

In the re­port re­leased this week, the ad­ju­di­ca­tor, Mu­vhango Lukhaimane, says a rea­son for the rise in com­plaints is height­ened pub­lic aware­ness about un­claimed ben­e­fits, although an un­wel­come side­ef­fect is that trac­ing agents, who act on be­half of po­ten­tial claimants, have been sub­mit­ting a large num­ber of com­plaints to her of­fice. Dur­ing the year, the ad­ju­di­ca­tor’s The Pri­vate Se­cu­rity Sec­tor Prov­i­dent Fund (PSSPF) con­tin­ued to dom­i­nate the dis­putes that came be­fore the tri­bunal of the Pen­sion Funds Ad­ju­di­ca­tor, Mu­vhango Lukhaimane, dur­ing the 2015/16 fi­nan­cial year. Of the 3 476 de­ter­mi­na­tions handed down dur­ing the re­port­ing pe­riod, the PSSPF ac­counted for 1 387, a stag­ger­ing 39.9 per­cent.

Lukhaimane slams the PSSPF in her an­nual re­port.

“The sit­u­a­tion with the gover­nance and op­er­a­tions of the PSSPF has re­peat­edly been brought to the at­ten­tion of the Fi­nan­cial Ser­vices Board, with­out any im­prove­ment. To date, this tri­bunal re­mains un­aware of any ac­tion that has been taken ei­ther against the board of man­age­ment of­fice de­cided to stop pro­cess­ing com­plaints from these agents, many of whom are “un­scrupu­lous op­er­a­tors” that charge a fee and then pro­vide very lit­tle in­for­ma­tion. Li­ai­son in this re­gard was con­tin­ued di­rectly with the com­plainants. Lukhaimane stresses of the PSSPF or the ad­min­is­tra­tor, Absa Con­sul­tants and Ac­tu­ar­ies, for glar­ing trans­gres­sions, such as fail­ure to al­lo­cate con­tri­bu­tions timeously, fail­ure to pay out ben­e­fits when due, in­cor­rect in­for­ma­tion given to mem­bers re­gard­ing the sta­tus of their claims or ful­fil­ment of em­ployer du­ties, fail­ure to is­sue ben­e­fit statements and fail­ure to in­ves­ti­gate death ben­e­fits timeously. This is non-com­pli­ance with the most ba­sic du­ties of a board of man­age­ment and an ad­min­is­tra­tor,” she says.

Lukhaimane says this fail­ure is il­lus­trated by the fact that, of the 1 387 PSSPF-re­lated de­ter­mi­na­tions, com­plainants were granted re­lief in 1 385 of these and only two were dis­missed. that her of­fice of­fers a free pub­lic ser­vice, to which re­tire­ment funds should draw the at­ten­tion of their mem­bers, and po­ten­tial claimants should ap­proach the of­fice di­rectly.

She says although the re­tire­ment-fund­ing in­dus­try is thriv­ing in South Africa, with about R3 tril­lion In the 2015/16 an­nual re­port of the Of­fice of the Pen­sion Funds Ad­ju­di­ca­tor, the ad­ju­di­ca­tor, Mu­vhango Lukhaimane, says a sig­nif­i­cant num­ber of com­plaints re­lated to pro­ce­dural de­lays in the trans­fer of fund ben­e­fits from one re­tire­ment fund to an­other.

“Union-aligned funds and ad­min­is­tra­tor-spon­sored funds are ha­bit­ual of­fend­ers in re­la­tion to this. This can anec­do­tally be as­cribed to the de­sire not to lose busi­ness in as­sets un­der man­age­ment, in­ef­fi­cient ad­min­is­tra­tion con­tin­ues to be at the root of many com­plaints to her of­fice – par­tic­u­larly de­lays in the pay­ment of with­drawal ben­e­fits. These de­lays are of­ten be­cause em­ploy­ers have not paid over con­tri­bu­tions to funds, although it is the re­spon­si­bil­ity of funds to en­sure that con­tri­bu­tions are paid.

One fund, the Pri­vate Se­cu­rity Sec­tor Prov­i­dent Fund, and its ad­min­is­tra­tor, Absa Con­sul­tants and Ac­tu­ar­ies, was sin­gled out as the big­gest source of com­plaints (see “Se­cu­rity fund a headache”).

Hold- ups in the pro­cess­ing of death ben­e­fits ac­counted for the sec­ond- high­est num­ber of stem­ming from ad­min­is­tra­tion and con­sult­ing fees.

“One fund where pro­ce­dural is­sues have man­aged to frus­trate par­tic­i­pat­ing em­ploy­ers and mem­bers wish­ing to trans­fer is the Chem­i­cal In­dus­tries Na­tional Prov­i­dent com­plaints fi­nalised in the 2015/16 re­port­ing year.

“In this fi­nan­cial year, many com­plaints re­lated to un­rea­son­able de­lays in the fi­nal­i­sa­tion of sec­tion 37C in­ves­ti­ga­tions ow­ing to the dila­tory con­duct of the boards of man­age­ment of funds. This tri­bunal can­not overly stress the im­por­tance of fi­nal­is­ing sec­tion 37C in­ves­ti­ga­tions within the al­lo­cated pe­riod of 12 months,” the ad­ju­di­ca­tor says.

(A sec­tion 37C in­ves­ti­ga­tion is car­ried out un­der sec­tion 37C of the Pen­sion Funds Act, which re­quires a re­tire­ment fund to de­ter­mine a de­ceased mem­ber’s de­pen­dants and ben­e­fi­cia­ries and ap­por­tion the ben­e­fit among them eq­ui­tably.) Fund, an in­stance where fund rules in­ad­ver­tently usurped the pow­ers of the Reg­is­trar [of Pen­sion Funds] and went far be­yond what the [Pen­sion Funds] Act in­tended in terms of sat­is­fy­ing the ex­pec­ta­tions of the mem­ber.

“This mat­ter has been re­ported to the reg­is­trar for in­ter­ven­tion, as the of­fend­ing pro­vi­sion in the [fund’s] rules will re­main valid un­less amended by the board of the prov­i­dent fund or the reg­is­trar,” Lukhaimane says.

“De­lays in the al­lo­ca­tion and dis­tri­bu­tion of death ben­e­fits lead to un­told suf­fer­ing on the part of de­pen­dants and ben­e­fi­cia­ries who would have sub­mit­ted all the doc­u­ments re­quired on time,” Lukhaimane says.

In one case cited in the re­port, she rapped a pen­sion fund on the knuck­les for tardy con­duct that re­sulted in a ben­e­fit re­main­ing un­paid for seven years.

Lukhaimane says the higher rate at which her of­fice has been able to process com­plaints can be at­trib­uted to im­proved ef­fi­cien­cies, in­creased pro­duc­tiv­ity, and im­proved re­sponses from funds and ad­min­is­tra­tors.

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