The Pension Funds Adjudicator (PFA) said in her annual report for 2017/2018 that 70% of complaints concerned the non-payment of withdrawal benefits or dissatisfaction with the benefit amount paid.
“Most of these had to do with employers’ non-compliance with the act which requires the payment of contributions within a specific time, said the PFA, Muvhango Lukhaimane.
Administrators,SALT Employee Benefits (Pty) Ltd (SALT), were singled out for their failure to provide accurate responses timeously on the high volume of complaints relating to the Private Security Sector Provident Fund (PSSPF).
“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 their 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.
“The number of funds that have concluded acknowledgement of debt agreements with employers and those who want the employers to pay has significantly increased. The funds often 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 also refused to pay over amounts deducted from employees’ salaries towards member contributions.”
Death benefit lump sum 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.
Another issue 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.
All matters, referring to unclaimed benefits are time barred which prevents the PFA from dealing with complaints that are lodged more than three years later.
These are sent to 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, the report said.
The PFA was established 20 years ago and a record 9 794 complaints were received in the last financial year, due largely to increased awareness of the office.
Of these, 4 405 complaints were determined, 2 571 were found to be out of jurisdiction, 1 462 were settled, while 367 were closed for various reasons.
“The Office of the Pension Funds Adjudicator (OPFA) is poised to join the new Ombud Council – which means that stakeholders, especially fund members, stand to be the biggest winners in a more integrated and streamlined financial services complaints’ management landscape,” Ms Lukhaimane said.
Former finance minister, Trevor Manuel launched the PFA on January 1 1998 and he appointed Professor John Murphy as the first PFA which gave pension fund members a voice in a forum whose decisions were binding without the formality and cost of traditional legal processes.
The OPFA has contributed to the development of retirement fund policy, legislative and regulatory amendments while ensuring much needed access to alternative dispute resolution in a complex area of law.
Ms Lukhaimane said 2017/18 was by far the most challenging since her appointment as PFA.
The number of justiciable complaints increased by over 30%.
“In resolving the complaints, it was imperative to maintain our turnaround times without compromising the quality of our output. Staff had to work together in order to streamline processes and share information speedily.”
The majority of complaints pointed to weak governance within funds and administrators, she pointed out.
Visit www.pfa.org.za, call 012 346 1738 or email firstname.lastname@example.org to lodge a complaint or for more information.
The service is free and all decisions are binding.