Publications
Partners
The Pension Fund Adjudicator (PFA) finds it "most disturbing" that the bulk of a record number of complaints it received during the 2018/2019 financial year relates to a failure by employers to comply with legal requirements relating to the payment of contributions to pension funds, as well as delays in paying out pension benefits.
Pension Funds Adjudicator Muvhango Lukhaimane told Fin24 the concern is employers not paying over contributions at all and funds or boards of management of funds not going through the enforcement processes to ensure compliance as required by the act.
"Often, if members are in stand-alone funds, the fund will try and get the employer to pay. However, if the members are in an umbrella fund, often the fund will just send automated reminders to the employer and after 90 says or so terminate the employer's participation without employing any further enforcement measures as required," said Lukhaimane.
In a message as part of the the PFA's annual report, Finance Minister Tito Mboweni says "it is clear that market conduct remains a burning issue as funds and administrators continue to grapple with such issues as non-payment of contributions, late payment and non-payment of benefits".
In terms of section 13A of the Pension Funds Act, an employer must pay contributions it collected from employees' salaries to the relevant pension fund. It must be done by the 7th day after the end of the month in respect of which the contributions were payable.
The PFA is concerned about what it perceives to be a failure to try and enforce measures against non-compliant employers or other responsible persons.
According to the latest annual report by the PFA, it is especially concerned about non-payment of contributions in the municipal sector.
In the view of the PFA, these are regulatory and compliance matters that should be tackled by the Financial Sector Conduct Authority (FSCA).
Yet, it sees "a grave indictment on our commitment to act in the best interest of members and acting in the spirit of treating customers fairly".
According to the report, non-compliance was concentrated in the large funds like umbrella funds, sectoral determination funds and industry funds.
"...it is apparent that the more removed a fund and its administrators are from the ordinary member and employer, the less compliance there is to basic regulatory requirements," states the report.
A number of municipalities in the Free State and North West Provinces, for example, were unable to pay contributions to funds, "thereby putting members' risk benefits at risk for extended periods of time", according to the report.
Complaints received by the Office of the Pension Funds Adjudicator during the 2018/2019 financial year increased to a record number - 16.38% more than during the previous period.
Almost 11 400 complaints were received during the 2018/2019 financial year of which 10 287 were finalised. Of the 5 316 cases ruled on, 88% were in favour of the complainants.
According the report, turnaround times of complaints suffered as a result of the increase in number of complaints and due to some funds or fund administrators submitting responses outside of prescribed time limits and often incomplete.
