- The fund failed to use a low-cost tracing method to locate the member and notify him of his benefits.
- R1 069 balance was eroded by monthly administration fees while the member remained unaware.
- Adjudicator orders repayment with interest and stresses that funds must take reasonable steps to trace beneficiaries.
A pension fund administrator has been formally reprimanded and ordered to repay a former security officer after failing to take basic steps to find him. This allowed his small retirement benefit to be eaten up by administrative fees, while he was unaware that the money even existed.
In a recent decision, Deputy Adjudicator Naheem Essop of the Office of the Pension Funds Adjudicator found that Tennant Life Benefit Pty Ltd, which administers the Fidelity Guards Retirement Fund, should have taken reasonable steps to trace the complainant and let him know about the benefit in his name. Instead, the fund allowed monthly charges to wipe out the amount completely.
Essop concluded that this failure directly caused the member to lose out financially and ordered Tennant to repay him R1,069.51 plus interest.
A working life of contributions, and one missing piece
The complainant worked for Fidelity Services Group Pty Ltd from 1998 until May 2024. Over the years, he belonged to more than one retirement fund as his employer changed providers.
He was eventually paid a withdrawal benefit of R137 614.48 by the Private Security Sector Provident Fund, which covered most of his contributions. Records showed provident fund deductions for years, and the fund confirmed that the contributions had been properly received and credited.
Essop accepted that the employer and this fund had met their obligations and dismissed the complaint against them, finding the member “was paid the correct withdrawal benefit”. But a much smaller, older transfer told a different story.
In 2018, just R1 069.51 was transferred to Tennant to hold for the member. Because Tennant said it did not have the complainant’s contact details, it did not notify him or try to pay out the benefit. Instead, monthly administration fees of R30 gradually reduced the balance until nothing was left. By the time the man left employment, the benefit had effectively disappeared.
A legal duty to take all reasonable steps
Tennant argued that it did not appoint a tracing agent because the cost of tracing would have been more than the value of the benefit, so it would not have been worthwhile. Essop rejected that argument.
“This submission contradicts Tennant’s claim that a tracing method, costing only R30.00, was available for use in this case, yet it was not employed,” he said. He stressed that the rules put an active responsibility on the administrator.
“Tennant disregarded its responsibilities to the complainant by not complying with rule 27.1.3, which states that the board has a legal duty to take all reasonable steps to trace members or beneficiaries rather than just waiting for them to come forward.”
The adjudicator also pointed out that the complainant never mentioned the Tennant benefit in his complaint, showing clearly that he did not know it existed. “This clearly indicates that the complainant was unaware of the existence of the benefit that was due to him held by Tennant,” Essop wrote.
“The complainant could have claimed the benefit if Tennant tracked him down and promptly informed him of its existence before the benefit was depleted by administrative costs.” He found that the administrator’s lack of action meant the member “suffered a financial loss of R1 069.51”.
Small amounts still matter
In the end, Essop ordered Tennant to repay the complainant the full R1 069.51 plus interest, restoring money that should never have been lost.
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