Vuyani Ngalwana, the Pension Funds Adjudicator, says there is "an endemic culture in the South African retirement industry of wanton disregard for the registered rules of a retirement fund".
In his latest ruling, Ngalwana says this culture "must be halted before immeasurable damage is caused, not only to retirement fund members but also to the industry itself."
Ngalwana has ordered that Mr J, a fund member who complained to him, must be refunded his contributions to the Noogy Foods Provident Fund that were deducted from his wages by his former employer, Noogy Foods CC, in breech of the rules of the fund.
Mr J told the adjudicator that the rules of the fund stated that it was a "non-contributory" fund. In other words, in terms of the rules, Mr J's employer had to pay all of his contributions to the fund.
The contributions were nine percent of his pensionable income. Instead, the company had deducted four percent from Mr J's income to pay the contributions. The administrators of the fund, Metropolitan Life, told the adjudicator that the four percent contribution formed part of a salary sacrifice arrangement between the employer and the member.
The adjudicator found "it was clear in terms of the rules that the complainant was not required to contribute to the fund".
"The employer, however, effectively contributed five percent and took four percent from the complainant's remuneration on a weekly basis, in breach of the fund's rules."
Costly delay
In his 32nd ruling involving retirement annuity (RA) funds and insurers, Ngalwana responded to a complaint by a fund member who lost nearly R14 000 because of the long delay in the transfer of his funds from from an RA fund administered by Metropolitan Life to a fund administered by Old Mutual.
The fund member asked for his funds to be transferred from the Moorgate Retirement Annuity Fund, administered by Metropolitan, to the South African Retirement Annuity Fund (SARAF), which is administered by Old Mutual.
He had completed an RA transfer form on May 26, 2004.
The transfer of any funds from one retirement fund to another, in terms of Section 14 of the Pension Funds Act, must be approved by the Registrar of Pension Funds .
However, on October 13, 2004, the Registrar of Pension Funds indicated that he was not satisfied with the signatories on the Section-14 documents submitted by Metropolitan. The transfer was not approved.
The member asked the adjudicator to rule that Metropolitan complete the Section-14 documents correctly and submit them to the Registrar for approval. He also claimed R13 813 in damages because he could have earned this amount had the transfer to the new RA fund taken place.
The adjudicator ordered Metropolitan, in its capacity as administrator of the Moorgate Retirement Fund, to submit the correct documentation to the Registrar and to credit the complainant's account in SARAF with the amount of R13 813 after the Registrar approved the transfer.
Metropolitan agreed to do this.