The Pension Funds Adjudicator, Muvhango Lukhaimane, has come down hard on a pension fund that is flouting the Pension Funds Act. The adjudicator has asked the Registrar of Pension Funds at the Financial Services Board to investigate the conduct of Bokamoso Retirement Fund and its administrator, Akani Retirement Fund Administrators, for repeatedly allowing unlawful deductions from members’ withdrawal benefits.

Late last year, Personal Finance covered two similar cases involving Bokamoso and Akani.

In the most recent determination, Ms N of Hammanskraal complained that she was not paid her full withdrawal benefit. She had been employed by Akani from March 2006 until she was dismissed on March 11, 2016. Her benefit statement, dated October 31, 2015, reflected a fund credit of R684 106, but her payout was just under R400 000.

In response, Bokamoso submitted that Ms N had been charged with misconduct, because she had breached her employer’s operational procedure in authorising the payment of a death benefit, resulting in Akani incurring a loss.

Ms N had been found guilty by a disciplinary committee, had signed a letter of apology and, on her dismissal, had been made aware that all the money owed to her employer would be recovered, Bokamoso said.

The breakdown of Ms N’s payout showed that her fund credit at the time of her dismissal was R633 513. Tax of R109 532 had been deducted, as had an amount of R139 504, which was labelled “Mahlebe’s death benefit”. In other words, the payment that Ms N had incorrectly authorised had been deducted from her retirement savings.

Bokamoso said the amount had been deducted in terms of section 37D of the Pension Funds Act, which states that an employer can recover a financial loss suffered due to an employee’s misconduct.

In her determination, Lukhaimane says that, as a general rule, the Act provides that pension benefits shall not be reducible, transferable or executable. However, there are certain exceptions. A pension fund may deduct any amount due by a member to his or her employer as compensation for “any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the member and in respect of which the member has, in writing, admitted liability to the employer or judgment has been obtained against the member in court”.

Lukhaimane says, however, that in the matter of Ms N, it appears Bokamoso relied on Ms N’s apology letter and the signed dismissal letter as an admission of liability. For a deduction to be allowed based on admission of liability, she says, the admission must be clear in its terms, must be signed by the member, and must contain:

• An admission by the member that she or he caused the loss;

• A statement as to the amount of the loss; and

• A statement that the loss was caused through theft, fraud, dishonesty or misconduct that involved dishonesty.

She says these requirements were not met by Ms N’s employer, and Ms N did not admit to causing the loss through theft, fraud, dishonesty or misconduct.

She ordered the pension fund to pay Ms N her outstanding benefit plus interest.

Lukhaimane says this was not the first time Bokamoso and Akani had made unlawful deductions, and she had raised the issue with the two organisations in the past.

It was on this basis that she recommended that the fund and its administrator be investigated.

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