Muvhango Lukhaimane, Pension Funds Adjudicator
A provident fund has been hauled over the coals by the Pension Funds Adjudicator for making payment of a member’s withdrawal benefit without consent and for acting contrary to the rules of the fund and the Pension Funds Act.
The member who complained to the Pension Funds Adjudicator Muvhango Lukhaimane said the SACCAWU National Provident Fund did not heed his request to transfer his benefit into an annuity account.
In its defence, the fund claimed the member had contacted its contact centre and requested the payment of his full benefit in cash to him.
When the fund was requested by Lukhaimane to provide the recording of the telephonic conversation with the call centre agent and to provide a copy of a withdrawal claim form completed by the complainant, it was unable to do so.
The complainant commenced employment with Pick n Pay Retailers (Pty) Ltd from 1 December 2017 until 17 November 2023. He was paid a withdrawal benefit of R23 322.36 on 2 February 2025 and R30 000 was paid into a retirement annuity on the same date.
The complainant claimed the employer failed to pay all provident fund contributions on his behalf to the fund. He indicated that the employer failed to provide him with proof of contributions paid from the date he received his first payment until the date of termination of his employment.
The complainant also submitted that he requested his full benefit to be transferred into an easy equities annuity account because it was tax-free. He did not request for a withdrawal benefit. He also queried the amount of tax that was deducted.
The fund said the complainant contacted its contact centre on 8 March 2024 and requested the payment of his full benefit in cash. The contact centre agent acted and imported the claim.
However, this process was halted due to a maintenance order notification. On 23 October 2024, the fund received the final maintenance order. The claim was then processed with the maintenance order. The complainant’s fund credit prior to the initiation of processing was R59 858.57. After deductions of the final maintenance order of R5 700.00 and tax of R5 824.54, the amount due to the member was R48 334.03.
The fund submitted that the claim was initiated as per the complainant’s instruction received on 8 March 2024. Further, the tax amount of R5 824.54 was on the full benefit and not tax owing to the South African Revenue Service by the complainant.
On 17 March 2025, the fund provided a transactional history which reflected contributions received from the employer for February 2018 to November 2023. The fund provided a payment letter dated 24 February 2025, which indicated that the complainant was paid a withdrawal benefit of R23 322.36 on 2 February 2025 and R30 000.00 was paid into a retirement annuity on the same date.
In her determination, Lukhaimane said she found that all contributions were paid on behalf of the complainant in terms of the rules of the fund and there were no further benefits due. Thus, this aspect of the complaint stood to be dismissed.
On the issue of not following the member’s request for his benefit to be transferred into an easy equities annuity account that was tax-free, Lukhaimane said the fund had submitted that the claim was initiated as per the complainant’s instruction received on 8 March 2024.
She said: “The fund was requested to provide the recording of the telephonic conversation on which the complainant gave the instruction to pay his benefit; however, it failed to do so.
“Furthermore, the fund was requested to provide a copy of a withdrawal claim form completed by the complainant, but it failed to provide same.
“Thus, in the absence of proof of the complainant’s instruction being heeded to, the fund acted in contravention of the rules and failed to ensure that the interests of members are protected at all times.
“Further, the failure by a pension fund to provide relevant information required by a member or a beneficiary for the exercise of his/her rights constitutes a breach of the duty to act in good faith and amounts to an improper exercise of powers and maladministration of the fund,” said Lukhaimane.
She directed the complainant to elect how he wanted the benefit to be paid and to notify the fund of such election. Should the complainant choose to transfer his benefit to either a pension fund, provident fund, retirement annuity, preservation fund, or provident preservation fund; then the complainant was directed to refund the amount he received from the fund.
The fund was ordered to liaise with SARS in order to reverse the tax directive and apply for a revised tax directive based on the complainant’s election.
The fund was further ordered to transfer the complainant’s full fund credit to his elected pension fund, provident fund, retirement annuity, preservation fund, or provident preservation fund.
ENDS
