2 days ago
Adjudicator criticises pension fund for ignoring complaints
The South African Local Authorities Pension Fund faces scrutiny after the Office of the Pension Funds Adjudicator reported it to the FSCA for failing to respond to multiple complaints, raising concerns over its compliance and fiduciary duties.
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The Office of the Pension Funds Adjudicator (OPFA) has come down hard on the South African Local Authorities Pension Fund for ignoring repeated requests for information, in what it describes as serious non-compliance with regulatory obligations.
Adjudicator Muvhango Lukhaimane reported the fund to the Financial Services Conduct Authority (FSCA) after it failed to respond to multiple enquiries from her office in the course of investigating a complaint.
'There were several complaints against the fund,' Lukhaimane says. 'And the lack of response from the fund reflects a disregard for the Pension Funds Act, its rules, and the best interests of members.'
The complaint in question was brought by a former South African Police Service employee who believed his withdrawal benefit had been improperly calculated. He asked the OPFA to determine whether his employer had consistently paid overall contributions to the fund, a factor that would directly affect the value of his benefit.
Despite being called upon to respond, the fund failed to file any response to the OPFA's request. As a result, the adjudicator proceeded to determine the matter without their input.
Lukhaimane described the fund's behaviour as 'intolerable,' saying it suggested multiple contraventions of the law and showed poor standards of fiduciary duty. 'The fund's unreasonable delay in responding to the complaint could not be entertained as it prejudiced the complainant,' she added.
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Noting the volume of cases her office handles, Lukhaimane stressed the importance of timely cooperation. 'It is, therefore, incumbent upon pension funds and administrators to ensure that enquiries from the Adjudicator are properly and adequately responded to. This is especially so since boards of funds and Principal Officers are required to be fit and proper.'
She says: 'The failure to respond to enquiries and to timeously response to complaints by such persons is a failure to uphold their fiduciary responsibilities. It impedes the Adjudicator's ability to deliver on its mandate, and if allowed to continue, will render the Adjudicator ineffective. It also constitutes a barrier to the complainant being able to have their complaint properly resolved.'
Lukhaimane also raised concerns about systemic issues within the fund's administration. '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.'
She named the fund's administrator, Fairsure Administration (Pty) Ltd, saying: '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.'
In her ruling, Lukhaimane ordered the fund to reconcile all contributions and advise the employer of any shortfalls. The fund must also furnish the complainant with a full breakdown of both his contributions and withdrawal benefits.
In addition, the employer has been ordered to pay any outstanding contributions to the fund, which in turn must credit the complainant for any shortfall.
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