Muvhango Lukhaimane, pension funds adjudicator. Picture: FINANCIAL MAIL
Muvhango Lukhaimane, pension funds adjudicator. Picture: FINANCIAL MAIL

Poor governance within funds and administrators is the reason behind most complaints to the pension funds adjudicator, it has emerged.

Adjudicator Muvhango Lukhaimane said, after releasing her office’s 2017-2018 annual report, that fund members have been forced to complain after things that should have been dealt with are left hanging, resulting in thousands of complaints and stretched resources at her office.

“Fund members are forced to approach the [adjudicator] on a myriad of issues that should be attended to by funds in the ordinary course of business,” Lukhaimane said

The most common problems are non-payment or late payment of contributions by employers, and the funds and administrators not paying out benefits. An employer withholding payments to a fund is not a technical issue, but theft of a member’s pension, she said.

Retirement funds are obliged by law to monitor the payment of contributions into the fund and to report to the trustees when contributions are not paid within a stipulated timeframe.

The adjudicator can order an employer to pay and her judgments can be executed, meaning a sheriff can attach the assets of an employer. If the trustees of the fund are able to identify company managers and directors responsible for payments, their assets can be attached.

The law was changed four years ago making it a criminal offence for employers to withhold contributions they are obliged to pay, however successful prosecutions are rare.

Hostage situation

In April 2018, a hostage situation played out at the offices of Reshebile Aviation and Protection Services. Forty retrenched airport security guards held staff hostage, demanding that a reported R1.2m in arrears contributions be paid. Lukhaimane said earlier in 2018 that security guards working for the company laid 55 complaints.

Money reported around the same time that many security guards who are members of the Private Security Sector Provident Fund had been victims of employers who steal contributions deducted from their wages. For the year to March 2018, the adjudicator’s office received 2,693 new complaints about this fund.

Lukhaimane said 2017-2018 was particularly challenging. “In resolving the complaints, it was imperative to maintain our turnaround times without compromising the quality of our output. The office did its best to finalise complaints expeditiously, despite the funds that generate the largest number of complaints take, on average, 90 days to file responses with the Office of the Pension Funds Adjudicator (OPFA), instead of the 30-day period,” Lukhaimane said.

“This means stretched human resources are expected to send multiple reminders to funds to file responses on matters that are mostly straightforward.” 

Lukhaimane said 9,794 complaints were received in the year under review, which is a record high. Of the total complaints, 4,405 were determined, 2,571 were found to be out of out of jurisdiction, and 1,462 were settled; 367 complaints were closed for various reasons.

Said Lukhaimane, “In some instances, intransigence from funds/administrators to provide information to complainants is inexplicable and totally unnecessary. In this regard, the OPFA has resorted to escalating these issues to board chairs and principal officers of funds.”