Keep an eye on your pension fund and make sure your employer is not
deducting money illegally from your pension assets for anything you owe
your company.
In cases brought before the Pension Funds Adjudicator, John Murphy, five
employers were rapped over the knuckles for making such deductions. This
may be only the tip of the iceberg since many cases do not make it to the
adjudicator`s office for one reason or another.
One of Murphy`s investigators, Naleen Jeram, says the law sets out very
strict guidelines under which your employer can dip into your retirement
fund to recover your debts.
Many people are unaware of what their rights are in this regard, he says.
The law regards your pension benefits as an integral and important asset of
your estate and under the Pension Funds Act you enjoy special protection.
The general principle is that nobody may touch your pension assets except
in very specific instances. Certain specified debts may be deducted from
your pension provided certain requirements are met. These requirements are
set out in section 37 (a) and 37 (d) of the Pension Funds Act.
The purpose of this particular section is to balance the protection of your
pension assets against the protection of your employer to recover housing
loans and compensation for certain losses that you may cause your employer
through wrongful conduct, Jeram says.
Your employer is legally allowed to deduct money directly from your pension
money (including from lump-sum benefits and the monthly pension you receive
after retirement) only under certain conditions:
* If the claim is for compensation (and no further amounts) for damage that
you cause by way of theft, dishonesty, fraud or misconduct on your part
during the course of your employment;
* Only if you admit liability in writing or your employer obtains judgment
against you. It is worth noting that a criminal conviction is not normally
sufficient. Only in rare instances do criminal courts award compensation
for damage or loss. Generally your employer would have to approach a civil
court to obtain an award in compensation for damages from you;
* The judgment or the written admission of liability must be for
compensation for the damage you caused; and
* The Pension Funds Act allows the fund to deduct the compensation owing to
your employer only from ``any benefit payable``. Watch out that your employer
does not abuse this right, by, for example, setting off what you owe
against the full actuarial reserve value of your pension assets.
The
actuarial reserve value is the amount held by a fund on actuarial advice
for the purpose of funding the benefits due to you. It is not necessarily
the amount that you receive in benefits.
Jeram says only if these conditions are met, may your fund deduct the
amount that you owe your employer from the benefit due to you under the
rules of your fund and pay it over to your employer.