- The Pension Funds Adjudicator is set to issue summons and subpoenas to force funds to engage with investigations.
- Recent rulings show that members have been left out of pocket due to negligent benefit payments and poor controls.
- Persistent governance failures are undermining member rights and leaving complaints unresolved.
When a member transferred his withdrawal benefit to a preservation fund, he had every reason to believe his money was safe. He was wrong. He later discovered the benefit had already been paid out to someone else.
In another case, a withdrawal benefit landed in a minor’s account, processed on the back of documents the complainant says he never signed. It is precisely this pattern that has pushed the Pension Funds Adjudicator to take decisive action.
The office is gearing up to issue summons against retirement funds that turn a blind eye to complaints, as findings of negligent benefit payments and deep-rooted governance failures reveal a growing threat to members’ savings.
This comes after repeated instances of funds failing to engage with investigations, while separate rulings have found that members were left unpaid or paid the wrong amounts because of poor controls and oversight.
Pension Funds Adjudicator Lebogang Mogashoa has confirmed that his office will begin issuing summons and subpoenas against funds and administrators that ignore or drag their feet on complaints. Mogashoa pointed to a pattern of non-cooperation, describing funds that are “not cooperating with the Office of the Pension Funds Adjudicator’s investigation processes by not responding to complaints lodged (timeously or at all), requesting many extensions to respond, and filing responses that do not comprehensively address the substance of the complaint.”
Speaking at the 30th Annual Pension Lawyers Association Conference, Mogashoa explained that his office sought a Senior Counsel opinion on the use of Section 30J of the Pension Funds Act, which empowers the Adjudicator to use “any procedure which he or she may consider appropriate in conducting an investigation, including procedures in an inquisitorial manner.”
Senior Counsel confirmed that these powers allow the Adjudicator to compel cooperation through summons. Mogashoa made clear that summons will be directed at Principal Officers and Chairpersons of pension fund boards, placing accountability squarely at the top. Failure to comply is a criminal offence and can be pursued through both the criminal justice system and civil contempt proceedings.
Benefit failures expose systemic weaknesses
The two cases are among a series of determinations that lay bare how poor governance and weak controls directly hurt members. Mogashoa found that funds had failed to put adequate systems in place to verify claims and process benefits correctly, resulting in payments being made to the wrong people.
In the first case, the member who had transferred his withdrawal benefit to a preservation fund was later told the benefit had already been paid out. The fund could not produce any proof of a withdrawal claim form. Mogashoa stated, “Thus, it can be inferred that the complainant never submitted a withdrawal claim form to receive his fund benefit.”
He further found, “Based on the submissions, the Adjudicator finds that the preservation fund did not provide sufficient evidence that the complainant elected to claim his withdrawal benefit.” The member remained entitled to his full benefit, including the investment growth that should have accrued over time.
In the second case, a withdrawal benefit was paid into a minor’s account. The complainant denied signing any of the documents used to process the claim, and the fund was unable to explain the discrepancies in the documentation or show that it had verified the legitimacy of the claim.
On the question of governance duties, Mogashoa said funds are required to exercise oversight over their administrators. He said, “This includes exercising an oversight function over its administrator and ensuring that processes, especially the payment of benefits, are carried out properly.”
He emphasised that “Section 7C(1) of the Act places a positive duty on the fund to act in the best interests of its members,” and that “in terms of section 7D(1) of the Act, the board of the fund is responsible for ensuring, inter alia, that proper control systems are employed by it.”
The fund was ordered to repay the complainant in full, including fund returns.
Ongoing governance failures
Mogashoa also highlighted broader systemic issues affecting the pension fund industry. A significant proportion of complaints stems from Section 13A, which requires employers to pay over pension contributions. He noted that 51 percent of complaints finalised in the last financial year related to this provision alone.
Employers continue to default on their obligations, with some employees resorting to anonymous tip-offs out of fear of retaliation. While some funds act promptly on behalf of members, others drag their feet, resulting in claims becoming time-barred. In some cases, funds deliberately avoid pursuing those responsible in order to protect client relationships, placing themselves in direct conflict with their fiduciary duties.
Delays are also a recurring problem in the distribution of death benefits under Section 37C. Mogashoa was critical of funds that take a passive approach, waiting for information to come to them rather than actively investigating claims. He pointed to one matter that has remained unresolved for decades, a stark illustration of what administrative inaction can cost families.
Enforcement signals a shift
Mogashoa confirmed that the office is actively building the infrastructure needed to put these enforcement measures into practice.
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