Yet again, 70% of complaints finalised by the Office of the Pension Funds Adjudicator (OPFA) during the last financial year concerned the non-payment of withdrawal benefits or dissatisfaction with the withdrawal benefit amount paid.
Unfortunately, most of these had to do with employers’ non-compliance with section 13A of the Act which requires the payment of contributions within a specific period of time, said Muvhango Lukhaimane, the Pension Funds Adjudicator.
“Whilst non-compliance remains high, the number of funds that have concluded acknowledgement of debt agreements with employers together with those that are formally pursuing employers to pay has significantly increased,” she said the 2017/2018 annual report of the OPFA.
“In a notable number of instances, however, the funds respond quite late to employers’ non-compliance with the payment of contributions."
“By the time the funds take action, the employer is either under business rescue or voluntary liquidation. In instances of voluntary liquidation and deregistration, employers simply set up a new entity and avoid paying the debts of the liquidated entity to the fund, thereby prejudicing members."
“In all instances, employers would also not pay over amounts deducted from employees’ salaries towards member contributions,” Ms Lukhaimane said.
Death benefit lumpsum payments remain the second highest number of complaints finalised. Funds continue to commence with their investigations quite late in the allocated 12-month period, especially retirement annuities.
However, the biggest issue with death benefit lumpsums is the failure by funds to properly complete the second leg of the investigation. Once the deceased member’s dependants and nominees have been confirmed, the next step is to determine the actual extent of each dependant/nominee’s financial dependency on the deceased.
This step is often incomplete as there is no supporting information or documentation to substantiate the extent of dependency. The OPFA is working on a guideline to industry in instances where the usual supporting documentation e.g. bank statements etc. cannot be produced.
“This is timely as there are now many ways to give money to a person without leaving any record of the transaction as such,” Ms Lukhaimane said.
Another grouse by the PFA in the report was the inability of Salt Employee Benefits (Pty) Ltd (Salt) to provide accurate responses timeously on the high volume of complaints relating to the Private Security Sector Provident Fund (PSSPF), which negatively affected the OPFA’s turnaround times.
At a certain stage, from the responses received, it was clear that the administration processes or systems were not up to the task as complainants’ records could not be verified.
There was also a significant increase in complaints lodged against the Transport Sector Retirement Fund (formerly the Road Freight and Logistics Industry Provident Fund) which is also administered by Salt, adding to the latter’s burden to comply with timelines.
“It is, therefore, important that whenever there is a change in administrators, a risk and compliance analysis is carried out to ensure that there is little or no interruption for members,” said Ms Lukhaimane.
Another worrying issue before the OPFA is that commercial umbrella funds sponsored by the large insurers and certain retirement fund administrators simply liquidate employer participation within three to six months of non-payment of contributions without following the prescribed process to demand outstanding contributions from delinquent employers.
In order to assist with the reduction of unclaimed benefits, all matters that are time barred due to the provisions of section 30I of the Act which prevents this office from dealing with complaints that are lodged more than three years from the date the cause of action arose, are referred to the Financial Services Board (now the Financial Sector Conduct Authority) for investigation on the Unclaimed Benefits database.
Of the 2 571 matters deemed out of jurisdiction, 165 were referred to other entities/organisations, whilst 2 406 were time barred.
ABOUT THE PENSION FUNDS ADJUDICATOR
The Office of the Pension Funds Adjudicator (OPFA) is a statutory body established to resolve disputes in a procedurally fair, economical and expeditious manner. The adjudicator's office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. The OPFA is situated in Pretoria, Gauteng.
For general enquiries or to lodge a complaint visit www.pfa.org.za, call 012 346 1738 or email Enquiries@pfa.org.za