Two-pot retirement system complaints were mainly about employers not paying over contributions and withdrawal problems.
The two-pot retirement system did not just change the retirement landscape, it also caused more complaints for the Pension Funds Adjudicator.
The system allows pension fund members to get access to a part of their retirement savings before retirement.
According to the new annual report of the Office of the Pension Funds Adjudicator, there was a 13% increase in the number of new complaints during the 2024/5 financial year, with the implementation of the two-pot system one of the reasons for the increase.
The two-pot retirement system was implemented on 1 September 2024.
Muvhango Lukhaimane, the Pension Funds Adjudicator, says pension funds received a significant number of withdrawal applications under the two-pot retirement system from members. However, there were processing delays, as some funds underestimated the uptake and some could not pay the claims as employers owed arrear contributions.
The Adjudicator’s office received a total of 239 complaints related to the two-pot retirement system from September 2024 to March 2025, excluding enquiries. According to the 2024/5 annual report, the pensions dispute resolution forum received 10 331 new complaints (9177 in the previous year) and disposed of a total of 10 100.
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Two areas of concern with two-pot retirement system
Lukhaimane says her office had two areas of concern.
The first was non-compliance with Section 13A of the Pension Fund Act, where employers failed to pay over retirement fund contributions. This remained a prevalent issue, making up 44.34% of all complaints investigated and closed.
The second was complaints about withdrawal benefits. In addition, the two categories often overlapped, with a complainant only discovering that their employer failed to pay contributions at the stage when they wanted to withdraw their benefits.
Minister of Finance Enoch Godongwana said that the recurrence of these issues and the high number of complaints remain a great concern. “Stakeholders are urged to remediate this undesirable result of poor fund governance, management and administration.
“This, in effect, undermines the government’s efforts as outlined in the three priorities of the government of national unity to reduce poverty, tackle the high cost of living and build a capable, ethical and developmental state.”
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Private security not paying over contributions
The office says the Private Security Sector Provident Fund (PSSPF) in particular also added to the surge in new complaints.
“Private security companies are obliged to participate in the PSSPF. Employers in the private security sector who deduct retirement fund contributions from their eligible employees’ salaries are unable to manage their finances properly.
“Additionally, the PSSPF does not appear to have a proper monitoring system in place to detect non-payment of contributions by employers and has also consistently failed to act against defaulting employers.”
Lukhaimane points out that the Financial Services Tribunal was established as a fee-free regulatory entity for aggrieved people that also reconsiders the Adjudicator’s determinations at little to no cost compared to the expensive and lengthy formal court process.
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During the period under review, 87 applications for reconsideration were made by people aggrieved by the Adjudicator’s decisions. The Tribunal issued 83 decisions and four applications were withdrawn. Of the 83 decisions, 54 were upheld and 27 were remitted for reconsideration.
COFI Bill will also bring change
The Conduct of Financial Institutions (COFI) Bill is expected to significantly change the legislative environment of financial regulatory tribunals. COFI is part of the broader Twin Peaks regulatory reform that aims to create a single, unified and consistent legal framework for the market conduct of financial institutions.
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Nondumiso Ntshangase, senior legal advisor at the office of the Adjudicator, says the COFI Bill may affect the mandate of the office by expanding the definition of “complaint” to also introduce “advice”.
Naheem Essop, deputy Pension Funds Adjudicator, says the expansion of the definition of a “complaint” to include not just disputes or grievances, but also issues arising from financial “advice” would mean that aggrieved consumers have the convenience of having all their financial disputes handled under one roof as opposed to being referred to other ombuds or entities with jurisdiction.
Ntshangase says the COFI Bill also proposes the definition of “complaint” to include a requirement to accept oral complaints. She points out this might create uncertainty as complaints might not be captured correctly, leading potential delays in finalising them. There will also be financial implications, as oral complaints will require independent transcription to ensure accuracy.
She added that the COFI Bill will further expand the definition of “retirement fund” to include public sector retirement funds, thereby expanding the Adjudicator’s jurisdiction to handle public sector fund complaints.
