The Pension Funds Adjudicator has voiced concern that, despite referring several matters of non-compliance on the part of Akani Retirement Fund Administrators to the Financial Services Board (FSB), there has been no improvement in its conduct.
The adjudicator, Muvhango Lukhaimane, has referred another complaint against Akani – which, she says, has “become a law unto itself” – to the FSB for corrective action to be taken. This follows a number of past cases involving Akani, which have been covered in Personal Finance (see “Pension funds wrongly withheld payouts”, “Pension fund censured for unlawful payout deductions” and “Pension fund asks FSB to review determinations”).
Mr R of Johannesburg was employed by Akani and was a member of the Bokamoso Retirement Fund, which it administers. He brought a complaint against Bokamoso and Akani about the deduction of his withdrawal benefit following his termination of service.
Mr R worked for Akani from July 2012 to August 2014. Following his resignation, a portion of his withdrawal benefit was deducted and paid over to Akani.
In his complaint to Lukhaimane’s office, Mr R submitted that, when he resigned from Akani, he was informed that he owed it R17 305. This represented a refund in respect of a performance bonus that had been paid to him.
He submitted that Bokamoso’s principal officer and Akani’s finance manager had told him that he needed to authorise Bokamoso to deduct the amount from his withdrawal benefit. He submitted that, although he was aware that the deduction was not permitted in terms of the Pension Funds Act, he gave his authorisation so that his withdrawal benefit could be paid.
He asked the adjudicator to order Bokamoso to refund him the money, which was wrongfully deducted from his benefit.
Bokamoso responded to the complaint by saying that it had made the deduction from Mr R’s withdrawal benefit on the strength of correspondence from Mr R that he owed Akani R17 000 and had authorised the fund to deduct the money and pay it over to Akani.
In her determination, Lukhaimane said the Pension Funds Act stipulates that deductions can be made from pension benefits only if the requirements set out in the Act have been met, namely that the member must have caused damage to his or her employer by reason of theft, dishonesty, fraud or misconduct, in respect of which the member has admitted liability or where a judgment has been obtained against the member.
She argued that what amounted to a performance bonus refund did not meet the requirements of the Act.
“Essentially, [Akani] sought a refund of the performance bonus from [Mr R]. Evidently, the receipt of a performance bonus by [Mr R] does not relate to damage suffered by [Akani] due to any theft, dishonesty, fraud or misconduct perpetrated by [him]. Therefore, [Bokamoso] could not attach [Mr R’s] withdrawal benefit under the circumstances. The first respondent acted unlawfully in deducting [Mr R’s] benefit.”
She ordered Bokamoso to pay Mr R the amount deducted, together with interest.
But she went further, chastising both Bokamoso and Akani for their conduct and referring the matter to the FSB.
“The conduct of the respondents deserves deprecation in the strongest terms. As key players in the pension fund industry, the respondents are expected to observe the application of the Act and act in utmost good faith, which was certainly absent in the present instance.
“What is of grave concern is that this tribunal has referred countless matters of non-compliance involving [Akani] to the FSB.
“In essence, [Akani] has become law unto itself, which cannot be countenanced. In light of the above concerns, this tribunal refers this matter to the FSB for necessary corrective action to be taken against the respondents,” Lukhaimane said.