Latest news with #MuvhangoLukhaimane
IOL News
14-06-2025
- Business
- IOL News
Adjudicator criticises pension fund for ignoring complaints
The South African Local Authorities Pension Fund faces scrutiny after the Office of the Pension Funds Adjudicator reported it to the FSCA for failing to respond to multiple complaints, raising concerns over its compliance and fiduciary duties. Image: Pexels The Office of the Pension Funds Adjudicator (OPFA) has come down hard on the South African Local Authorities Pension Fund for ignoring repeated requests for information, in what it describes as serious non-compliance with regulatory obligations. Adjudicator Muvhango Lukhaimane reported the fund to the Financial Services Conduct Authority (FSCA) after it failed to respond to multiple enquiries from her office in the course of investigating a complaint. 'There were several complaints against the fund,' Lukhaimane says. 'And the lack of response from the fund reflects a disregard for the Pension Funds Act, its rules, and the best interests of members.' The complaint in question was brought by a former South African Police Service employee who believed his withdrawal benefit had been improperly calculated. He asked the OPFA to determine whether his employer had consistently paid overall contributions to the fund, a factor that would directly affect the value of his benefit. Despite being called upon to respond, the fund failed to file any response to the OPFA's request. As a result, the adjudicator proceeded to determine the matter without their input. Lukhaimane described the fund's behaviour as 'intolerable,' saying it suggested multiple contraventions of the law and showed poor standards of fiduciary duty. 'The fund's unreasonable delay in responding to the complaint could not be entertained as it prejudiced the complainant,' she added. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Noting the volume of cases her office handles, Lukhaimane stressed the importance of timely cooperation. 'It is, therefore, incumbent upon pension funds and administrators to ensure that enquiries from the Adjudicator are properly and adequately responded to. This is especially so since boards of funds and Principal Officers are required to be fit and proper.' She says: 'The failure to respond to enquiries and to timeously response to complaints by such persons is a failure to uphold their fiduciary responsibilities. It impedes the Adjudicator's ability to deliver on its mandate, and if allowed to continue, will render the Adjudicator ineffective. It also constitutes a barrier to the complainant being able to have their complaint properly resolved.' Lukhaimane also raised concerns about systemic issues within the fund's administration. 'When the administrative wheels of a fund come off, it starts with the fund's failure to respond to complaints that require data from its administration system relating to payment of contributions.' She named the fund's administrator, Fairsure Administration (Pty) Ltd, saying: 'All indications are that there is an issue with the receipt and allocation of contributions. It is, therefore, imperative that the FSCA acts with haste to avoid further prejudice to members.' In her ruling, Lukhaimane ordered the fund to reconcile all contributions and advise the employer of any shortfalls. The fund must also furnish the complainant with a full breakdown of both his contributions and withdrawal benefits. In addition, the employer has been ordered to pay any outstanding contributions to the fund, which in turn must credit the complainant for any shortfall. PERSONAL FINANCE
The Citizen
13-06-2025
- Business
- The Citizen
Adjudicator reports Local Authorities Pension Fund for misconduct
The Pension Funds Adjudicator is holding the pension fund for local authorities accountable for not paying over pension contributions. The Pension Funds Adjudicator has severely criticised the South African Local Authorities Pension Fund for failing to respond to repeated requests for information and has reported the fund's misconduct to the Financial Services Conduct Authority (FSCA). Muvhango Lukhaimane, the Pension Funds Adjudicator, says her office has received several complaints against the fund, and she believes the fund's lack of response reflects a disregard for the Pension Funds Act, its rules, and the best interests of its members. She has reported the fund to FSCA to act against its officials. ALSO READ: What happens to your pension fund when you pass away? Complaint to Pension Fund Adjudicator about withdrawal benefit One of the complaints she received was from someone employed by the South African Police Service, who was unhappy with the amount received as his withdrawal benefit when he stopped working. He requested that the Office of the Adjudicator investigate whether the employer had failed to make all required contributions to the fund on his behalf, as this would affect the amount he could withdraw. When the office of the Adjudicator contacted the fund for a response to the complaint, the fund failed to file a response, forcing the Adjudicator to proceed with determining the matter. Lukhaimane said in her determination that the fund's non-compliance is 'intolerable' as it points to several contraventions of the Pension Funds Act and also reflects poor conduct of duty. 'The fund's unreasonable delay in responding to the complaint could not be entertained as it prejudiced the complainant. My office deals with high volumes of complaints, which need to be disposed of expeditiously to properly fulfil its mandate. 'Therefore, it is mandatory for pension funds and administrators to ensure that they respond properly and adequately to enquiries from my office, especially since boards of funds and principal officers are required to be fit and proper.' ALSO READ: Councils take pension billions Failure to respond is failure to uphold fiduciary responsibilities Lukhaimane says the fund's failure to respond to enquiries and respond timeously to complaints is a failure to uphold the officials' fiduciary responsibilities. 'It inhibits my office's ability to deliver on its mandate and, if it is allowed to continue, will render the Adjudicator's office ineffective. 'It also constitutes a barrier to complainants' being able to have their complaints properly resolved,' said Lukhaimane. She said that when the administrative wheels of a fund come off, it starts with the fund's failure to respond to complaints that require data from its administration system relating to payment of contributions. 'The administrator in this instance is Fairsure Administration (Pty) Ltd, and all indications are that there is an issue with the receipt and allocation of contributions. It is therefore imperative that the FSCA acts with haste to avoid further prejudice to members.' ALSO READ: Two-pot retirement system: Nothing for thousands of pension fund members Pension Funds Adjudicator's acts on non-compliance Lukhaimane ordered the fund in her determination to reconcile the contributions received and advise the employer of any outstanding contributions. In addition, the fund was ordered to provide the complainant with a breakdown of his contributions and a breakdown of his withdrawal benefit. She also ordered his employer to pay any arrears to the fund. The fund was ordered to pay the complainant any outstanding fund credit due to the arrears for contributions. The Office of the Pension Funds Adjudicator (OPFA) is a statutory body established to resolve disputes in a procedurally fair, economical and expeditious manner. The adjudicator's office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty regarding pension funds. If you have a question or a complaint, visit the Adjudicators website at call it on 012 346 1738 or email Enquiries@ NOW READ: Pension Fund complaints surge amid trust and accountability concerns
IOL News
11-05-2025
- Business
- IOL News
Pension funds must comply with PFA information requests, says Muvhango Lukhaimane
The Pension Funds Adjudicator, Muvhango Lukhaimane, asserts that pension funds must provide requested information without beneficiary consent, clarifying the PFA's authority under the Protection of Personal Information Act. A pension fund is obliged to provide the Pension Funds Adjudicator (PFA) with requested information without obtaining consent from beneficiaries, says Muvhango Lukhaimane, the PFA. According to Lukhaimane, funds cannot use the Protection of Personal Information Act (POPIA) as an excuse to withhold information from the PFA. She says that as a public body, as defined in the Act, the PFA has the right to access personal information when performing its duties. This came to light in a recent determination, where Lukhaimane made it clear that the PFA falls within the definition of a tribunal under POPIA and is permitted to collect personal information when necessary for its investigations. The issue arose when a fund initially refused to provide its investigation report to the PFA, citing the need to protect beneficiaries' personal details. Only after being reminded that POPIA allows the PFA to process personal information in the exercise of its powers and duties, did the fund comply with the request. Lukhaimane clarified that, in matters involving death benefits, the PFA's role is to assess whether the board acted rationally, reasonably, and within the law. 'Therefore, a fund cannot hide behind POPIA and bears the onus of demonstrating that it has conducted a proper investigation per section 37C,' she says. The Financial Services Tribunal further reinforced this point, stating that the PFA should insist on investigation reports to confirm that funds have provided sufficient information to justify their allocations. A recent complaint brought before the PFA highlighted the consequences of inadequate investigations. The case involved the Eskom Pension and Provident Fund, which was tasked with allocating a lump sum death benefit of R560,160 following the passing of a pension fund member. The board distributed the benefit among the deceased's customary spouse, life partner, and children, but Lukhaimane was not satisfied that a thorough investigation had been conducted to justify the final distribution. She ruled that the fund had a duty to actively investigate the extent of each beneficiary's financial dependency on the deceased to ensure an equitable allocation. The deceased had nominated his customary spouse to receive 80% of the benefit, with 10% allocated to his life partner and the remainder to two of his children. However, the actual allocation deviated significantly from his wishes: 28% was allocated to his customary spouse 28% to his life partner Two percent each to five major children 30% to a minor child Two percent each to two other minor children The fund justified its decision by arguing that the life partner qualified as the deceased's factual dependant, given that she was 50 years old, unemployed, and had no immediate income prospects. However, Lukhaimane found that the board had failed to give sufficient weight to the beneficiary nomination form, which must be a substantial factor in any decision on death benefits. Lukhaimane stressed that the law recognises three categories of dependants: Legal dependants – Those for whom the deceased had a legal duty of support, such as spouses and children. Factual dependants – Individuals who relied on the deceased for financial support, but for whom there was no legal obligation. Future dependants – Those who could have become financially reliant on the deceased over time. While qualifying as a legal or factual dependant does not automatically entitle someone to a portion of the benefit, the determining factor remains financial dependency. Lukhaimane says dependants must not be left destitute by the death of the deceased, which places an obligation on the funds to actively investigate the financial circumstances of each beneficiary. 'There must be a good reason for a fund not to give effect to a nomination, to justify its decision to deviate from the wishes of the deceased,' she ruled. She also criticised the Eskom Pension and Provident Fund for failing to gather adequate proof of dependency, stating: 'The fund indicated that the complainant and the deceased's major children failed to provide proof of the extent of their financial dependency on the deceased. However, there is a duty on the fund to actively investigate this before making an allocation.' In this case, the board's decision was set aside, reinforcing the importance of transparent and fair decision-making in pension funds. Ultimately, she says pension funds have a duty to ensure that dependants receive what they are entitled to, not through assumption or incomplete investigations, but through rigorous and well-documented financial assessments. PERSONAL FINANCE
IOL News
06-05-2025
- Business
- IOL News
Understanding the exemption of legacy policies in the new pension system
Any policy in respect of a retirement annuity plan entered into before 1 September 2024 - is exempted from the two-component benefit system. Members of pension funds must understand the implications of the new two-component retirement system and how legacy policies are exempted from it, following a recent ruling by the Pension Funds Adjudicator. Any policy in respect of a retirement annuity plan entered into before 1 September 2024 - is exempted from the two-component benefit system. The two-component pension system, implemented on 1 September 2024, splits retirement fund contributions into a "Savings Component" and a "Retirement Component". One-third of contributions goes to the Savings Component, which allows members to withdraw funds before retirement, while the remaining two-thirds go to the Retirement Component, which must be used to purchase a retirement income product. Muvhango Lukhaimane, the Pension Funds Adjudicator, recently ruled on a complaint received from a fund member, who was aggrieved that the South African Retirement Annuity Fund denied him his right to withdraw from his savings component. The complainant's policy commenced on February 1, 1998, with a contractual retirement option date of February 1, 2028. The complainant had a fund credit of R63 134.74 on June 15, 2024. The fund submitted the Income Tax Act (ITA) provides for the exclusion of legacy policies, defined as pre-universal life and universal life policies. It indicated that the complainant's policy fell under this category and was, therefore, excluded from the new two-component retirement system. In compliance with the rules of the Financial Services Conduct Authority, the fund amended its rules to provide that the relevant elements of the two-component system would not apply to legacy retirement annuity policies. The fund submitted that the complainant had an option to transfer his current policy to a two-component compliant retirement annuity to benefit from the new system. The deadline for this transfer was August 1, 2024, and the fund did not receive a transfer request within this period. The fund indicated that the complainant may transfer this contract to a compliant retirement annuity. However, he would need to reinstate the premiums to start accumulating value in the savings component going forward to exercise a savings withdrawal in terms of the two-component retirement system. In her determination, Lukhaimane said it was clear from the fund's submissions that the complainant's policy was exempted from the two-component retirement system in terms of section 1 of the ITA and the fund rules. She said she was satisfied the fund acted lawfully in terms of its rules, the ITA and the policy contract in refusing to pay the complainant the withdrawal he requests. The complaint was dismissed. The Office of the Pension Funds Adjudicator is a statutory body established to resolve disputes in a procedurally fair, economical, and expeditious manner. The adjudicator's office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. THE POST
IOL News
06-05-2025
- Business
- IOL News
Understanding the legacy policy exemption in South African retirement annuities
Members of pension funds should be aware that legacy policies are exempt from the new two-component benefit system, as clarified by the pension funds adjudicator, Muvhango Lukhaimane. Members of pension funds are advised to understand that a legacy policy, any policy in respect of a retirement annuity plan entered into before September 1, 2024, is exempted from the two-component benefit system, according to the pension funds adjudicator, Muvhango Lukhaimane. She says the two-component pension system, implemented on September 1, 2024, was designed to offer greater flexibility to retirement fund members by splitting contributions into two distinct components. One-third of the contributions are allocated to a Savings Component, which allows members to make withdrawals before retirement, while the remaining two-thirds go to the Retirement Component, which must be used to purchase a retirement income product upon reaching retirement age. Recently, Lukhaimane ruled on a complaint from a fund member who was frustrated that the South African Retirement Annuity Fund denied his request to withdraw from his savings component. According to case details, the complainant's policy commenced on February 1, 1998, with a contractual retirement date set for February 1, 2028. As of 15 June 2024, he had a fund credit of R63,134.74. The fund explained that the Income Tax Act (ITA) excludes legacy policies—defined as pre-universal life and universal life policies—from the new two-component system. The complainant's policy falls within this category, meaning he is not entitled to the benefits of early withdrawals under the new system. She says to ensure compliance with the Financial Services Conduct Authority (FSCA), the fund amended its rules to confirm that legacy retirement annuity policies remain unaffected by the regulatory changes. The fund further explained that the complainant had the opportunity to transfer his policy to a two-component compliant retirement annuity before the deadline of August 1, 2024. Since he did not request a transfer, his policy remains under the legacy framework, making it ineligible for withdrawals. However, if he wishes to benefit from the new system, he would need to reinstate premium payments to start accumulating value in the savings component, allowing him to exercise withdrawals in the future, Lukhaimane says. In her determination, Lukhaimane said it is clear from the fund's submissions that the complainant's policy is exempted from the two-component retirement system in terms of section 1 of the ITA and the fund rules. She said she was satisfied that the fund acted lawfully in terms of its rules, the ITA, and the policy contract in refusing to pay the complainant the withdrawal he requested. The complaint was dismissed. PERSONAL FINANCE
