- Samuel Mahlangu questioned his pension payout, believing it did not reflect the contributions made over almost 13 years of service.
- The Financial Services Tribunal found that benefits in a defined benefit fund are worked out according to the fund's rules and legal formulas, not simply by adding up contributions.
- The Tribunal rejected the application, confirming that the Municipal Employees Pension Fund paid the correct gross benefit of R366 990.57.
Many employees assume that the amount they receive from a pension fund should mirror the total contributions made by them and their employer over the years. A recent Financial Services Tribunal decision has highlighted that this is not always the case.
The tribunal has dismissed an application by Samuel Mahlangu, a former employee of Steve Tshwete Local Municipality, who challenged the amount paid to him by the Municipal Employees Pension Fund after his resignation. The ruling confirms that members of defined benefit pension funds are entitled to benefits calculated in accordance with the fund's rules and applicable legislation, rather than the total value of contributions paid into the fund.
Mahlangu began working for Steve Tshwete Local Municipality as a Library Assistant Grade 1 on 1 August 2011. He became a member of the Municipal Employees Pension Fund on the same date, under the defined-benefit category applicable to members who joined after 30 June 1998.
He resigned on 30 June 2024 after approximately 12 years and 11 months of service. His annual remuneration at the time of resignation was R262 065.
Following his resignation, the fund calculated a gross withdrawal benefit of R366 990.57. After tax of R61 108.30 and a tax directive fee of R200 were deducted, a net amount of R305 682.27 was paid into his bank account on 23 August 2024.
Mahlangu later lodged a complaint with the Pension Funds Adjudicator, arguing that the amount paid was too low considering the contributions made during his employment. He questioned whether all contributions had been properly accounted for and sought an investigation into possible outstanding employer contributions and unlawful deductions.
How the benefit was calculated
The Municipal Employees Pension Fund explained that it operates as a defined benefit fund. Unlike funds where benefits are linked directly to the value of individual contributions and investment returns, defined benefit funds calculate benefits using rules and formulas contained in the fund's governing documents and pension legislation.
The fund explained that Mahlangu's member contributions amounted to R143 702.85 and that accumulated interest totalled R57 138.94, resulting in a combined amount of R200 841.79. In terms of the fund's rules, this figure was multiplied by 1.5, producing a withdrawal benefit of R301 262.69.
The fund also calculated a minimum individual benefit in accordance with the Pension Funds Act. Using Mahlangu's average annual salary over three years, his years of pensionable service and an actuarial factor, the minimum individual benefit amounted to R366 990.57.
Because the minimum individual benefit exceeded the withdrawal benefit, the fund paid the higher amount. The fund further rejected Mahlangu's contention that his pension had shown no growth. Benefit statements submitted during the proceedings reflected increases in both his withdrawal benefit and minimum individual benefit between 2022 and 2024.
Complaint dismissed
The Pension Funds Adjudicator dismissed the complaint on 10 July 2025 after finding that the fund had correctly applied its rules and paid the appropriate benefit.
Mahlangu subsequently applied to the Financial Services Tribunal for reconsideration of that decision. Although the application was filed several months late, the Tribunal granted condonation after considering his explanation that he was unrepresented, could not afford legal assistance and needed additional time to understand the documents.
In support of his reconsideration application, Mahlangu alleged that the determination was biased in favour of the fund, questioned the reliability of the Municipal Employees Pension Fund and argued that pension payouts required further investigation.
The tribunal found that these allegations were unsupported by evidence. It noted that Mahlangu had not identified any breach of the fund's rules and had produced no actuarial or expert evidence to challenge the calculations relied upon by the fund.
Advocate SM Maritz, writing on behalf of the tribunal, said, "The applicant's assertion that the adjudicator was biased, and that the fund 'sabotaged' his monies, is wholly unsubstantiated."
Maritz further said, "The applicant has failed to establish, on a balance of probabilities, that the fund did not comply with its rules or with the applicable provisions of the Pension Funds Act, or that any further benefit is owing to him."
The tribunal concluded that the fund had correctly calculated the withdrawal benefit and that Mahlangu had in fact received a payout that exceeded his contributions-based entitlement because the minimum individual benefit calculation produced a higher figure.
The application for reconsideration was dismissed.
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