A pension fund’s reluctance to respond to the Pension Fund Adjudicator about a complaint, despite being approached to do so on no less than four occasions, has been referred to the Financial Sector Conduct Authority (FSCA).
The FSCA is responsible for market conduct regulation and supervision, ensuring a fair and stable financial market where consumers are informed and protected.
In this case, a woman lodged a complaint with the adjudicator that she had not been paid her divorce benefit by the Municipal Employees Pension Fund. In terms of her divorce settlement agreement, she was entitled to 50% of her ex-husband’s pension interest (the amount he had accumulated in his pension fund).
After the complaint was lodged, the fund paid her an amount of R56 000. She was dissatisfied with the amount and advised the adjudicator’s office accordingly.
The adjudicator wrote to the principal officer of the fund, Ms MM Le Grange, and copied in the administrative manager of Akani Retirement Fund Administrators, Juan Moodley, on four occasions, requesting information on how the benefit amount had been calculated. All of the emails were ignored.
The deputy adjudicator, Advocate Matome Thulare, held that the Office of the Pension Funds Adjudicator deals with high volumes of complaints, which need to be dealt with expeditiously.
“It is, therefore, incumbent on registered and licensed entities such as pension funds and administrators to ensure that enquiries from the adjudicator are properly responded to. This is especially so since boards of funds and principal officers are required to be fit and proper.
“Administrators must be approved by the regulator before being granted a licence to operate. The failure to respond to enquiries in respect of complaints is a failure to uphold their fiduciary responsibilities. It impedes on the adjudicator’s ability to deliver on her mandate, and if allowed to continue, will render the office ineffectual.”
The deputy adjudicator further stated that there is a prerogative by the Financial Sector Conduct Authority to ensure that all financial institutions treat their customers fairly and that it is high time that the regulator scrutinises their conduct, because it is the regulator that permits these persons to operate in the retirement funds sector.
“The Act places a positive duty on a fund or employer to properly consider a complaint lodged in terms of section 30A(1) and to respond to it. There is no reason why such a duty would not extend to complaints lodged with the adjudicator.”
The deputy adjudicator held that the conduct of both the fund and the administrator was undignified and inconsistent with adhering to their fiduciary responsibilities. He referred the matter to the FSCA.
Cornelia Buitendag, head of retirement funds conduct supervision at the FSCA, as well as the FSCA Commissioner, Olano Makhubela were copied in on the determination.
Adv Thulare held that the adjudicator cannot grant default orders. It is, therefore, necessary for the adjudicator to obtain information and clarity from the complainant, which is then submitted to the fund or administrator for a response.
A default order, based on one-sided incorrect facts, could result in financial detriment to the relevant pension fund, more especially so when it comes to defined-contribution funds. In other instances, a default order may not be appropriate given the type of relief sought in the complaint.
CONTACT THE PENSION FUNDS ADJUDICATOR
The Office of the Pension Funds Adjudicator investigates complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. For general enquiries or to lodge a complaint, visit www.pfa.org.za, call 012 346 1738 or email [email protected]
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