Reviewing pension fund law trends

Many retirement funds are governed very well, but despite efforts to simplify the pension fund process, reports reveal that customer satisfaction can still improve a lot in the case of many funds.

According to the 2015-2016 report by the Pension Funds Adjudicator, 9 667 new complaints were received, which amounted to an increase of 37.9% on the previous year.

It is still a cause for concern that at least 70% of the complaints relate to withdrawal benefits, pointing to inefficiencies in fund administration processes. This extends to the allocation and distribution of death benefits, responsible for the second highest number of complaints finalised”, the report stated.

Ms Muvhango Lukhaimane, the Pension Funds Adjudicator, noted in her report for the 2015/6 period that the interest created by publicity about Unclaimed Benefits had contributed to the rise in complaints.

The complaints stemmed from a variety of issues including, “infrequent or poor quality provision of benefit statements, weak explanations of fund information, delays in requests for transfer to other funds or inordinate delays in the payment of retirement and death benefits.”

Increased public awareness of the rights of fund members and beneficiaries has led to an increase in complaints before the Pension Funds Adjudicator, whose office was established to deal with complaints in an efficient and expeditious manner.

Because of these rising tensions and, at a different level, other disputes which arose, the retirement fund industry has become a lot more litigious, explains Jacques de Klerk, a pension fund specialist.

“This is evident from several cases which served before, among others, the Supreme Court of Appeal. Several of these relate to administrative actions, disputes about the interpretation of rules and contracts, commercial deals taken on and attacked afterwards. This clearly illustrates the role of funds in the general commercial environment, and the level of sophistication required to govern funds properly.”

“The Financial Services Industry is subject to a major regulatory reform, sparked by, among other things, unscrupulous people ‘taking gaps’ in the regulatory and legislative oversight system to benefit from other peoples’ money. Often at the expense of those who are most vulnerable to abuse. The Fidentia scandal serves as a prime example of this.”

To help fund administrators and lawyers prepare for this reform UCT [email protected] will host an updated Pension Fund Case Law course in Cape Town on 8 November 2018.

The presentation involves case law in front of the Appeal Board of the Financial Services Board (now the Financial Services Tribunal), the Courts of South Africa and the Pension Funds Adjudicator. A short update on erstwhile matters of importance will also be included, including recent Constitutional Court case law involving funds.

For more information contact [email protected]