The Pension Funds Adjudicator has ordered two retirement funds to repay members due to significant administrative failures in processing benefit payments. In separate rulings, Adjudicator Lebogang Mogashoa found that the funds failed to properly verify claims before making payments, in contravention of the Pension Funds Act.
Administrative Lapses
The first case involved a former employee of PricewaterhouseCoopers South Africa who transferred his retirement savings to the Alexander Forbes Preservation Fund after leaving his job in 2007. Years later, in November 2024, he requested payment of his benefit, only to be told that it had already been paid in December 2011 by cheque. The complainant denied ever submitting a withdrawal claim or receiving any payment.
The fund argued that an administrative error, an incorrect member number captured by the employer, resulted in records being swapped, leading to a payment being made in error. However, it failed to demonstrate where the money was ultimately paid and could not produce a withdrawal claim form signed by the member. Mogashoa found this to be a decisive failure.
Consequences of Administrative Failures
In another case, a former employee of Kempston Motor Group discovered that his withdrawal benefit, just over R17,000, had been paid to a two-year-old child. The member, who belonged to the Motor Industry Provident Fund, says he never submitted a claim and did not recognise the signatures on the documentation used to process the payment.
The fund maintained that it had received completed claim forms supported by certified documents. However, the Adjudicator found that the fund had failed to exercise proper oversight and ensure that the payment was made to the correct person. The fund has been ordered to repay the member and take steps to prevent similar errors in the future.
Some of the key issues that led to these failures include:
- Lack of proper verification of claims before making payments
- Insufficient oversight and administrative controls
- Failure to ensure that payments are made to the correct persons
The Adjudicator’s rulings highlight the importance of proper administrative controls and oversight in the management of retirement funds. Members of these funds have a right to expect that their benefits will be paid correctly and that their funds will be managed in accordance with the law.
