Since the implementation of the two-pot retirement system the Pension Fund Adjudicator was flooded with complaints.
While the pension fund members who withdrew some of their retirement savings under the two-pot retirement system were happy to have access to these savings for emergencies, the majority of complaints to the Pension Funds Adjudicator came from members who found that their employers failed to pay over their contributions to their pension funds.
Naheem Essop, deputy Pension Fund Adjudicator, said the office of the adjudicator received 10 331 complaints in the past financial year, an increase from the previous year of about 12.5%, which means about 41 complaints per day. “That tells you a lot about the level of dissatisfaction from members in the retirement fund space.”
He was speaking at the annual conference of the Institute of Retirement Funds Africa (IRFA).
Essop said the office of the pension funds adjudicator manager has to dispose of 10 100 complaints, at an average of 40 per day. Out of that, 5 434 were investigated fully, and a formal determination was issued.
The office received complaints for the first time in its history about websites, and Essop points out that these complaints were the highest category of complaints received. “This tells you that our members are becoming a lot savvier with the internet, and I think that is a cue for some of the administrators that may want to beef up their websites.”
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Two-pot retirement system complaints mainly about unpaid contributions and benefits
In addition, he pointed out that about 82% of the complaints related either to Section 13A compliance issues, where employers are not paying over contributions or withdrawal benefits, with 38% of complaints relating to withdrawal benefits where there was some issue about non-payment of contributions. It is a leading issue when it comes to retirement funds.
Essop said the adjudicator now also has a new category: the two-pot retirement system. The adjudicator’s office received about 50 complaints a day after the implementation of the two-pot retirement system, which shows the effect of the system on the adjudicator’s office.
“You can see that, from last year to this year, there is an increase of about 12.5% in complaints received.”
Essop said relief was granted to the consumer in 4 800 complaints. “Compare this to 611 where the complaint was dismissed. This tells you these complainants are getting relief from our office, which means that either the funds or the employers are not doing what they are supposed to be doing in terms of the rules or in terms of the Pension Funds Act.”
The adjudicator made a determination in 3 300 of the complaints, usually against employers who failed to pay over pension fund contributions. The determinations with a monetary value amounted to R97.2 million.
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Not paying over contributions can see trustee held personally liable
“This is what happens when employers fail to pay over contributions and the risk-benefit lapses. In most cases, we find that trustees are not doing what they are supposed to be doing in terms of their prescribed duties to collect contributions.
“I think we are going to get to a stage where we will be asked to hold the trustees liable, especially if an employer has gone under and there is no one else to claim from. This is a warning for trustees because once you have a prescribed duty that is legislated, and you do not follow the prescribed steps, you can be held legally liable for the consequences that flow from that.”
The office of the pension funds adjudicator is now also working with the National Financial Ombuds Scheme, which gives it an access point at its offices in Houghton Estate, where members can walk in and lodge complaints since 1 August. The first two complaints were lodged at that office last week.
Since the beginning of the new financial year, the pension funds adjudicator received 5 490 complaints between 1 April and last Friday. The daily average for receiving complaints is now 55 compared to 41 last year.
Essop attributes the jump in the number of complaints to the implementation of the two-pot retirement system, as the jump started on 1 September when the system was implemented.
