You may wonder what rights your employer has to withhold your retirement
fund money when you resign, if the company has sustained loss due to your
actions.
It boils down to what the rules of your retirement fund and the Pension
Funds Act says about the matter.
There is a provision in the Pension Funds Act that allows your pension fund
to deduct from your benefit any amount due to your employer as a result of
any fraud, dishonesty, theft and misconduct on your part, subject to certain
conditions.
But Naleen Jeram, an investigator in the Pension Funds Adjudicators office,
says the Adjudicator, John Murphy, will not tolerate your employer abusing a
right to withhold your benefits. Each case is taken on its merits, within
the context of the pensions funds rules.
In a recent case, involving the Kelvinator Group Services of South Africa
Provident Fund, the fund withheld the early withdrawal benefit of about R84
000 of one of its factory shop advisers, pending the outcome of a criminal
case involving fraud or misconduct. The fund`s rules did not allow for the
withholding of retirement benefits.
The adviser had allegedly embezzled about R78 000 and was dismissed.
The outcome of the criminal case against this person is still pending some
18 months after he left the company.
In his interim ruling and in the absence of a rule allowing withholding of a
benefit, Murphy has postponed the case to February next year, allowing the
fund to hold onto the retirement benefit, provided the matter is sorted out
within a reasonable time. He also ruled that the company may not hang onto
an amount greater than the value of the claim.
In another case, Murphy ruled that the fund could not hold back on a
retirement benefit - also an early withdrawal benefit - any longer than its
rules allowed.
In a case involving the Absa Group Pension Fund, the bank instructed the
pension fund to withhold payment of an early withdrawal benefit from one of
its bank managers, alleging it had lost a large amount of money as a result
of the manager`s misconduct. The manager resigned voluntarily.
The fund rules entitled the fund to withhold retirement benefits for not
more than 12 months. The bank instructed the fund to do so, pending the
outcome of an investigation into the former bank manager`s misconduct, and
the fund withheld R500 000. During the 12 month period, the bank took
further steps to recover the money. Only after the 12 months had lapsed, did
the bank issue summons against the manager.
Murphy says it was acceptable for the bank to instruct the fund to withhold
the money, because the amount it alleges it had lost as a result of the bank
manager`s actions, was almost R6 million, which is a substantial amount, and
more importantly, the rules of the fund allowed it.
But, Murphy says, the bank was not entitled to hang onto the money for
longer than the 12 months stated in the funds rules. This was sufficient
time for the bank to have pursued recovering its loss. Because the bank did
not take steps in the 12 months, it lost the advantage of withholding the
benefit. He ordered the fund to pay the former manager the money.