Most of the R80 billion surplus accumulated in retirement funds across the country could disappear in lawyers' fees if proposed legislation on the surplus is adopted, John Murphy, the Pension Funds Adjudicator, has warned.
Addressing the Pension Lawyers' Association in Cape Town this week, he said he welcomed the proposed amendment to the Pension Funds Act as a "brave attempt" to tackle difficult issues.
But, Murphy said, provisions for dispute resolution would lead to a "nightmare of jurisdictional skirmishes".
The amendment lays down procedures retirement funds must go through to share out any surplus and makes provision for specialist tribunals to deal with disputes over the distribution of surpluses.
Murphy was concerned that too many courts and tribunals would have jurisdiction over the appropriation of the surplus: In addition to his own office, the High Court, the Labour Court, the Council for Conciliation, Mediation and Arbitration and now also the specialist tribunals would all have some power.
There were already nine or 10 institutions or tribunals with jurisdiction over pension disputes, he said, and the legislation would add specialist tribunals to the list and would also cut back on the powers of Murphy's own office.
In addition, the legislation gave actuaries too much influence in the surplus distribution process.
"The provisions of the Act regulating dispute resolution ... conjure up visions of lawyers, members, employers and various other interested parties tripping over themselves, wasting vast amounts of time and money trying to find the right forum in which to resolve a dispute," Murphy said. "Forum shopping will become the order of the day. There will be endless skirmishes over jurisdiction and formalistic legal issues."
"One fears most of the reported R80 billion surplus will disappear in legal fees while parties try to sort out disputes of one kind or another," Murphy said.
He said there could be at least 1 000 disputes over surpluses in retirement funds over the next three years.
To deal with these disputes, an efficient, accessible, informal, cheap and quick system was needed, run by people who not only understood pension law and actuarial issues, but also knew something about dispute resolution.
He said if the proposed legislation went through, dispute resolution would be "expensive, formalised, inaccessible, cumbersome and unwieldy".
"It will be of little benefit to anyone perhaps except the lawyers.
"What South Africa needs is a single one-stop shop - a Pensions Complaints Tribunal with exclusive jurisdiction in relation to all pension fund matters arising from whatever quarter," Murphy said.
The tribunal should consist of a panel of senior lawyers, and senior actuaries could be appointed when needed.
All disputes about the sharing and distribution of surpluses and all other pension fund complaints could be referred by any interested party to the tribunal, for conciliation, mediation and if necessary for adjudication, he said.
"Only then shall we develop a coherent jurisprudence and a quality investor protection service," Murphy said.
"Until then, we shall continue to be dogged by formalism, technical point taking and wasteful skirmishes."