Pension funds involved in disputes could find themselves caught in a “perfect circle” if, aggrieved with a decision of the Pension Funds Adjudicator, they turn to the Financial Services Tribunal, which replaced the Financial Services Board Appeal Board.
This is the view of pension fund lawyer Graham Damant, partner in the employment and benefits practice at Bowmans. “The tribunal has only two courses of action: to send a matter back to the adjudicator to reconsider or to dismiss it. As we have recently seen, this could create a cycle where a matter goes back and forth between the two bodies.”
In a recent decision, the tribunal disagreed with the adjudicator’s ruling in a dispute involving an actuary facing a claim that his actions had resulted in a R40 million loss to a major retirement fund.
“This is a very important case, both for its merits and the new process for funds that are unhappy with a decision of the adjudicator,” Damant says.
The retirement fund had initially referred the matter to the adjudicator, which ruled that the actuary alone was responsible for R40m in overpayments made to exiting members of the fund. The overpayments, made over a number of years, stemmed from a “hard-coding error” in the spreadsheet system the actuary had been using.