Muvhango Lukhaimane, the Pension Funds Adjudicator
The Office of the Pension Funds Adjudicator saw a 13% increase in the number of new complaints during the 2024/5 financial year, with the implementation of the two-pot system being one of the reasons for the rise.
The two-pot system, which came into effect from 1 September 2024, enabled members of retirement funds to have access to money from their savings component without leaving employment.
Funds received a significant number of two-pot withdrawal applications from members. However, there were processing delays, as some funds underestimated the uptake, whist some could not pay the claims as employers owed arrear contributions. The OPFA received a total of 239 two-pot related complaints from September 2024 to March 2025 (excluding enquiries).
According to the 2024/5 Annual Report of the of the OPFA, the pensions dispute resolution forum received 10 331 new complaints (9177 in the previous year) and disposed of a total of 10 100.
Two areas of concern
Non-compliance with Section 13A of the Act, whereby employers failed to pay over retirement fund contributions, remained a prevalent issue, making up 44.34% of all complaints investigated and closed. Complaints concerning withdrawal benefits constituted 38.79% of all complaints. Further, the two categories often overlapped, with a complainant only discovering that his or her employer failed to pay contributions at the stage of withdrawing their benefit.
Minister of Finance Enoch Godongwana said in a message to the annual report: “The recurrence of these issues and the high number of complaints remain of great concern, and stakeholders are urged to remediate this undesirable result of poor fund governance, management, and administration.
“This, in effect, undermines the government’s efforts as outlined in the three priorities of the Government of National Unity to reduce poverty, tackle the high cost of living, and build a capable, ethical, and developmental state,” he said.
The Private Security Sector Provident Fund (PSSPF) in particular also added to the surge in new complaints. Private security companies are obliged to participate in the PSSPF. Employers in the private security sector who deduct retirement fund contributions from their eligible employees’ salaries, are not able to manage their finances properly. Additionally, the PSSPF does not appear to have a proper monitoring system in place to detect non-payment of contributions by employers and has also consistently failed to act against defaulting employers.
The Financial Services Tribunal (FST) was established as a fee-free regulatory entity for aggrieved people that, amongst other functions, exists to reconsider the PFA’s determinations, at little to no cost relative to the expensive and lengthy formal court process. During the period under review, 87 applications for reconsideration were made by people aggrieved by the OPFA decisions. The FST issued 83 decisions and four applications were withdrawn. Of the 83 decisions, 54 were upheld, and 27 were remitted for reconsideration.
Muvhango Lukhaimane, the Pension Funds Adjudicator, said in the annual report: “Through continuous evaluation, stakeholder feedback, and agile adaptation to legislative and industry changes, including the implementation of the two-pot retirement system, the OPFA remains steadfast in its commitment to justice, fairness, and quality service for all retirement fund members
“While the implementation of the two-pot system has been successful, a further rise in complaints related to two-pot withdrawals is anticipated in the 2025/26 financial year, prompting the OPFA to prioritise resource allocations and proactive stakeholder engagement.”
The COFI Bill
Meanwhile, the Conduct of Financial Institutions (COFI) Bill is expected to significantly change the legislative environment of financial regulatory tribunals. COFI is part of the broader Twin Peaks regulatory reform, that aims to create a single, unified, and consistent legal framework for the market conduct of financial institutions.
Nondumiso Ntshangase, Senior Legal Advisor at the OPFA, said the impending COFI Bill may affect the mandate of the OPFA by expanding the definition of “complaint” to also introduce “advice”.
According to the Deputy Pension Funds Adjudicator, Naheem Essop, the expansion of the definition of a “complaint” to include not just disputes or grievances, but also issues arising from financial “advice” could empower the OPFA to investigate and adjudicate cases where poor or misleading advice has led to adverse outcomes for pension fund members – an area that previously may have fallen outside its jurisdiction.
Ntshangase said the COFI Bill also proposes the definition of “complaint” to include a requirement to accept oral complaints. She said this might create uncertainty as complaints might not be captured correctly, leading potential delays in finalising them. There will also be financial implications, as oral complaints will require independent transcription to ensure accuracy.
She said the COFI Bill will further expand the definition of “retirement fund” to include public sector retirement funds, thereby expanding the OPFA’s jurisdiction to address public sector fund complaints.
ENDS
