Complaints about retirement funds withholding employees’ benefits continue to flood the office of the Pension Funds Adjudicator. In four recent cases, the adjudicator, Muvhango Lukhaimane, ordered funds to pay the complainants the benefits due to them.

In all the cases, the funds argued that the Pension Funds Act allowed them to deduct or withhold an amount to compensate the employer for, among other things, theft, dishonesty, fraud or misconduct.

Lukhaimane found in all cases that the relevant section of the Act did not apply and ruled in favour of the complainants.


Ms M of Kempton Park complained that Bokamoso Retirement Fund and Akani the Retirement Fund Administrators had withheld her payout. She was employed by Akani from January 2005 to the end of September 2015.

The Bokamoso Retirement Fund responded by saying it had not received any documents from Akani to process Ms M’s payment.

Akani said Ms M owed it money relating to a study loan and another loan. It also said it was investigating a number of suspicious transactions performed by Ms M over weekends, when its offices were closed.

Akani said it had confronted Ms M about the transactions and she had subsequently resigned. It was awaiting completed forms from Ms M to finalise her payout, from which it would subtract any deductions for study loans and advance payments made to her.

In her determination, Lukhaimane said the tribunal could find no lawful or reasonable grounds for Ms M’s benefit to be withheld. She also ruled that the deductions could be made from Ms M’s remuneration, not her withdrawal benefit.

She ordered the Bokamoso Retirement Fund to pay Ms M’s withdrawal benefit, less only the deductions permitted in terms of the Act (in this case, only tax) within three weeks of the determination.


Ms K of Kempton Park was also employed by Akani Retirement Fund Administrators, from January 2015 to January 2016, and brought a similar complaint against the Bokamoso Retirement Fund and Akani after Akani refused to pay her withdrawal benefit.

She complained that Akani told her she would not receive a benefit, because Akani had trained her and paid her a bonus subject to her working for one year.

Akani told the adjudicator it regarded Ms K as “absent without leave”, because she had not returned to work after it re-opened in January 2016. It said Ms K had not served out her notice period, and it was entitled to make any necessary deductions in lieu of this. It also submitted that Ms K had been granted an advance payment provided she remained employed for a year.

In her determination, Lukhaimane said it was noted that Ms K had breached her employment contract by failing to serve her notice period and by not honouring the conditions for the advance payment. However, she again found that the deductions Akani wanted to make from Ms K’s withdrawal benefit were not permissible under the Pension Funds Act.

She said: “Akani, as a fund administrator, ought to be familiar with the Act and its provisions that entail the permissible deductions from a member’s benefit.”

She ordered Bokamoso to pay Ms K her benefit.


Ms N, of Adelaide in the Eastern Cape, complained that the Consolidated Retirement Fund for Local Government, Verso Financial Services and Nkonkobe Local Municipality had withheld her withdrawal benefit following the termination of her employment.

She was employed by the Nkonkobe municipality from August 2001 to January 2013. She said in her complaint to the adjudicator that she had been dismissed for alleged fraud, but that, after three years since her dismissal, it was clear that the municipality had no intention of instituting any legal proceedings against her.

According to Verso Financial Services, the administrator of the retirement fund, Ms N had been investigated for fraud after a loss in the municipality’s treasury office. An internal disciplinary enquiry had been instituted and Ms N was found guilty of misappropriating funds and dismissed.

In August 2013, the retirement fund was served with an order by the High Court barring it from paying R300 000 of Ms N’s pension benefits until the criminal investigation and legal process were finalised. On the strength of the court order, the retirement fund had calculated and paid the balance of the benefit. Verso said that the retirement fund regularly followed up with respect to the legal process.

In her determination, Lukhaimane said that, on a plain reading, the Pension Funds Act does not authorise the withholding of a member’s benefit where he or she is potentially liable for theft, fraud or misconduct against the employer.

She said the purpose of the High Court order was to afford the municipality an opportunity to exhaust all possible legal avenues to recover the alleged loss from the complainant, within a reasonable time.

“It could not have been the intention of the court to allow the [municipality] to sit idly for more than three years from the date of [Ms N’s] termination of service and not pursue either criminal or civil proceedings against her. “

Lukhaimane said the municipality had failed to provide proof of whether or not it had instituted any civil or criminal proceedings against Ms N, and the inescapable conclusion was that it appeared not to have a valid case against her.

“Thus, the [retirement fund] must pay Ms N’s withdrawal benefit without any further delay,” Lukhaimane said.


Mr P of Queensburgh complained that RFS Umbrella Provident Fund, RFS Administrators and Kintetsu World Express South Africa had withheld his benefit.

He was employed by Kintetsu from May 2006 to November 2013. He was told by Kintetsu that it was instituting a civil action against him, which he is defending.

The RFS provident fund submitted that Kintetsu had refused to sign and release Mr P’s withdrawal form. The benefit due to Mr P at July 21, 2016 was R542 926, which included investment returns to that date.

RFS Administrators said it had a record of court proceedings against Mr P by Kintetsu. It submitted that a civil matter between the two parties had been placed on the court roll for February 2017. The case concerned Mr P breaching his employment contract.

After analysing the facts, the RFS provident fund submitted that Mr P had to be paid what was due to him, because there was no judgment against the fund or Mr P, enough time had been allowed for Kintetsu to provide the judgment, and the court matter was a civil case between the employee and his employer. The provident fund submitted that it awaited proof of bank details from Mr P and confirmation of his income tax number.

Kintetsu submitted to the adjudicator that the case against Mr P was opened in 2014. However, because of the seriousness of the matter, it was on-going.

In her determination, Lukhaimane said that section 37D of the Pension Funds Act provides that a number of requirements must be met before a deduction is permissible. However, she said that “a deduction relating to a breach of employment contract is not permissible in terms of section 37D. Furthermore, the fact that [Kintetsu] has instituted civil action against [Mr P] does not justify the withholding of the complainant’s withdrawal benefit.”

Lukhaimane said Mr P was denied access to a benefit that should have become available on the termination of his employment three years ago.

“Therefore, [RFS Umbrella Provident Fund] must be ordered to pay Mr P punitive damages in the amount of five percent of his benefit … [in addition to] his withdrawal benefit plus interest, on receipt of proof of his banking details and income tax reference number,” she said.