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Registrar asked to probe Retirement Fund






Muvhango Lukhaimane, Pension Funds Adjudicator
Pretoria: The Pension Funds Adjudicator has requested the Registrar of Pension Funds to investigate the conduct of a retirement fund and its administrators for failing to comply with the Pension Funds Act and the rules of the fund on more than one occasion.
Muvhango Lukhaimane said it was perturbing that her Tribunal had previously addressed the matter of unlawful deductions with Bokamoso Retirement Fund (first respondent) and Akani Retirement Fund Administrators (Pty) Ltd (second respondent) but the respondents had refused to take cognisance of the concerns raised.
Ms AM Ngobeni of Hammanskraal had complained she was not paid her full withdrawal benefit. She had been in the employ of the second respondent from March 2006 until her service was terminated on 11 March 2016.
The complainant submitted that she was dissatisfied with the quantum of her withdrawal benefit. She indicated that her benefit had decreased and such reduction was due to an alleged error in paying a death benefit whilst she was still in employment.
The complainant annexed a copy of her benefit statement dated 31 October 2015, reflecting a fund credit of R684 106.80. She stated further that she was not paid her overtime and her long service payment by the second respondent.
The first respondent submitted that the complainant was charged with misconduct in that she breached the second respondent’s operational procedure in paying a death benefit. Her actions resulted in the second respondent incurring financial loss.
The first respondent stated that the complainant appeared before a disciplinary committee on 10 March 2016 and was charged with gross negligence and misconduct. It stated the complainant pleaded guilty and apologised for her actions. It attached a copy of the letter signed by the complainant apologising for the incident and providing an explanation for her actions.
The first respondent submitted that the complainant’s service was terminated on 11 March 2016 by the second respondent. In support thereof it attached a copy of a letter addressed to the complainant advising that she was found guilty of charges of misconduct. The letter further provided that all monies owed to the second respondent would be recovered. It further stipulated that the complainant signed the documents and acknowledged the content of the letter. The letter was signed by the complainant on 11 March 2016.
The first respondent submitted that the complainant was subsequently paid a withdrawal benefit in terms of section 37 of its rules. It provided a breakdown of the benefit as follows:
                                                Gross Benefit:                           R 633 513.53
                                                Add late payment interest           R    4 760.05
                                                Less SARS Tax:                        R109 532.43
                                                Less Directive Admin Fee          R         75.00
                                                Less Advance Bonus                R     6 875.00
                                                Less Mahlebe’s death benefit     R 139 504.51
                                                Nett Benefit                              R 396 036.64
It indicated that an amount of R139 504.51 was deducted in terms of Section 37D(1)(b)(ii) of the Act, wherein the second respondent recovered financial loss suffered due to the complainant’s misconduct.
In her determination, Ms Lukhaimane said as a general rule, section 37A of the Act provided that pension benefits shall not be reducible, transferable or executable. The object of section 37A was to protect members’ pension benefits.
However, she said, there were exceptions to this principle in certain circumstances. A registered fund may deduct any amount due by a member to his employer on the date of his retirement or on which he ceases to be a member of the fund, as compensation for “any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the member and in respect of which the member has in writing admitted liability to the employer; or judgment has been obtained against the member in any court, including a magistrate’s court”.
“In the present matter, it appears that the first respondent relies on the complainant’s apology letter and the signed dismissal letter as an admission of liability by the complainant.
“However, in the case of a deduction based on written admission of liability, the admission must be clear in its terms, must be signed by the member, and must contain the following:
  • An admission by the member that she or he caused the loss
  • A statement as to the amount of the loss; and
  • A statement that the loss was caused through theft, fraud, dishonesty or misconduct that involved dishonesty.
“It is clear that the letter relied upon by the first respondent as an admission of liability does not meet the requirements in that, she did not admit to causing the loss through theft, fraud, dishonesty or misconduct.
“It is imperative that a written acknowledgement of liability should be clear and must amount to an unequivocal admission of guilt to the employer. The first and second respondents failed to provide this Tribunal with any submissions indicating that either civil or criminal proceedings have commenced against the complainant for the recovery of the loss it incurred as a result of the complainant’s dishonesty or theft.
“It is common cause that the first respondent deducted an amount of R139 504.51 which it indicated was the loss the second respondent suffered as a consequence of the complainant not following procedure in paying a death benefit and a further amount of R6 875 in respect of an advance bonus it had paid. These deductions do not meet the criteria for the deductions permissible and are, therefore, unlawful.” 
Ms Lukhaimane ordered the first respondent to pay the complainant her outstanding withdrawal benefit plus interest.
“In the instance, the conduct of the first and second respondents cast a very negative light on the capability of the respondents to perform their duties and obligations in terms of the Act and the rules of the first respondent.
“The first respondent in effecting the deductions that were not permissible from the complainant’s withdrawal benefit appears to have disregarded or ignored its responsibilities and obligations, to the detriment of its member.
“What further exacerbates the issue at hand is the fact that this Tribunal has previously addressed these deductions with the respondents however, the respondents refused to take cognisance of the concerns raised.
“In casu, the respondents failed to comply with the Act and the rules of the first respondent on more than one occasion. It is on this basis that this matter is referred to the Registrar of Pension Funds to conduct an inspection in terms of section 24 and/or 25 of the Act, regarding the first respondent’s compliance with the Act and its rules. 
“It is further recommended that the Registrar initiate a thorough investigation into the conduct and licensing conditions of the second respondent,” Ms Lukhaimane said.
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 or call 012 346 1738.
Source: Meropa Communications
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