Member complained to adjudicator that the fund ignored his request to transfer his money to an annuity account.
The South African Commercial Catering and Allied Workers Union (Saccawu) provident fund has been reprimanded by the Pension Funds Adjudicator (PFA) for paying a member’s withdrawal benefit without his consent and for acting contrary to both the rules of the fund and the Pension Funds Act.
The member complained to the adjudicator, Muvhango Lukhaimane, that the Saccawu National Provident Fund ignored his request to transfer his benefit into an annuity account.
In response, the fund claimed the member had contacted its call centre and requested that his full benefit be paid to him in cash.
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‘We acted upon instruction’
However, when asked by Lukhaimane to produce a recording of the call or a completed withdrawal claim form, the fund was unable to do so.
The complainant, who had been employed by Pick n Pay Retailers from December 2017 to November 2023, received a withdrawal benefit of R23 322.36 on 2 February 2025, while R30 000 was paid into a retirement annuity on the same date.
He alleged that his employer failed to pay all provident fund contributions on his behalf and had not provided proof of payments made from the start of his employment until termination.
He also stated that he had asked for his full benefit to be transferred into an EasyEquities annuity account, which he believed to be tax-free, and did not request a withdrawal benefit.
He further questioned the amount of tax deducted.
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The fund said the complainant contacted its call centre on 8 March 2024 to request full payment in cash, and that this instruction was processed, though delayed by a maintenance order notification.
Once the final maintenance order was received on 23 October 2024, the claim was finalised. The complainant’s fund credit at that stage was R59 858.57, from which R5 700 was deducted for the maintenance order and R5 824.54 for tax, leaving a balance of R48 334.03.
The fund maintained that the claim had been initiated per the complainant’s instruction and that the tax was applied correctly to the full benefit.
When asked to provide evidence, the fund submitted a transactional history of contributions from February 2018 to November 2023, confirming that all contributions had been received. It also produced a payment letter confirming the withdrawal benefit payments.
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No proof forthcoming
In her ruling, Lukhaimane found that all contributions were duly paid according to the fund’s rules and that no further benefits were owed, dismissing this part of the complaint.
However, she criticised the fund’s handling of the member’s withdrawal benefit, finding that it had failed to prove that the complainant had authorised the cash payment.
“The fund was requested to provide the recording of the telephonic conversation in which the complainant gave the instruction to pay his benefit; however, it failed to do so,” Lukhaimane said.
“Furthermore, the fund was requested to provide a copy of a withdrawal claim form completed by the complainant, but it failed to provide same.
“Thus, in the absence of proof of the complainant’s instruction being heeded to, the fund acted in contravention of the rules and failed to ensure that the interests of members are protected at all times.”
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She added that when a pension fund withholds information that a member or beneficiary needs to exercise their rights, it breaches its duty to act in good faith and amounts to misuse of authority and poor fund administration.
Lukhaimane directed the complainant to choose how he wanted his benefit paid and to notify the fund accordingly.
Should he opt for a transfer to another retirement vehicle, such as a pension, provident or preservation fund, he must refund the cash amount previously paid.
She ordered the fund to liaise with the South African Revenue Service to reverse the tax directive and apply for a revised one based on the complainant’s election. It must also transfer the complainant’s full fund credit to his chosen retirement vehicle.
This article was republished from Moneyweb. Read the original here.
