Adjudicator reports Local Authorities Pension Fund for misconduct
The Pension Funds Adjudicator has severely criticised the South African Local Authorities Pension Fund for failing to respond to repeated requests for information and has reported the fund's misconduct to the Financial Services Conduct Authority (FSCA).
Muvhango Lukhaimane, the Pension Funds Adjudicator, says her office has received several complaints against the fund, and she believes the fund's lack of response reflects a disregard for the Pension Funds Act, its rules, and the best interests of its members.
She has reported the fund to FSCA to act against its officials.
ALSO READ: What happens to your pension fund when you pass away?
Complaint to Pension Fund Adjudicator about withdrawal benefit
One of the complaints she received was from someone employed by the South African Police Service, who was unhappy with the amount received as his withdrawal benefit when he stopped working.
He requested that the Office of the Adjudicator investigate whether the employer had failed to make all required contributions to the fund on his behalf, as this would affect the amount he could withdraw.
When the office of the Adjudicator contacted the fund for a response to the complaint, the fund failed to file a response, forcing the Adjudicator to proceed with determining the matter. Lukhaimane said in her determination that the fund's non-compliance is 'intolerable' as it points to several contraventions of the Pension Funds Act and also reflects poor conduct of duty.
'The fund's unreasonable delay in responding to the complaint could not be entertained as it prejudiced the complainant. My office deals with high volumes of complaints, which need to be disposed of expeditiously to properly fulfil its mandate.
'Therefore, it is mandatory for pension funds and administrators to ensure that they respond properly and adequately to enquiries from my office, especially since boards of funds and principal officers are required to be fit and proper.'
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Failure to respond is failure to uphold fiduciary responsibilities
Lukhaimane says the fund's failure to respond to enquiries and respond timeously to complaints is a failure to uphold the officials' fiduciary responsibilities. 'It inhibits my office's ability to deliver on its mandate and, if it is allowed to continue, will render the Adjudicator's office ineffective.
'It also constitutes a barrier to complainants' being able to have their complaints properly resolved,' said Lukhaimane.
She said that when the administrative wheels of a fund come off, it starts with the fund's failure to respond to complaints that require data from its administration system relating to payment of contributions.
'The administrator in this instance is Fairsure Administration (Pty) Ltd, and all indications are that there is an issue with the receipt and allocation of contributions. It is therefore imperative that the FSCA acts with haste to avoid further prejudice to members.'
ALSO READ: Two-pot retirement system: Nothing for thousands of pension fund members
Pension Funds Adjudicator's acts on non-compliance
Lukhaimane ordered the fund in her determination to reconcile the contributions received and advise the employer of any outstanding contributions. In addition, the fund was ordered to provide the complainant with a breakdown of his contributions and a breakdown of his withdrawal benefit.
She also ordered his employer to pay any arrears to the fund. The fund was ordered to pay the complainant any outstanding fund credit due to the arrears for contributions.
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 regarding pension funds.
If you have a question or a complaint, visit the Adjudicators website at www.pfa.org.za, call it on 012 346 1738 or email Enquiries@pfa.org.za.
NOW READ: Pension Fund complaints surge amid trust and accountability concerns
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