The Bokamoso Retirement Fund, administered by Akani Retirement Fund Administrators, has been ordered by the Pension Funds Adjudicator to pay back an amount deducted from a man’s retirement fund withdrawal benefit in respect of a study loan.
The adjudicator, Muvhango Lukhaimane, said the Financial Sector Conduct Authority (FSCA) should investigate the fund for unlawful conduct.
The complainant, Mr A, was a member of the Bokamoso fund. He was paid a withdrawal benefit of R14 868 on July 30 this year, after the deduction of R60 879 in respect of a study loan. Mr A submitted in his complaint that he signed an acknowledgement of debt in respect of a study loan of R52 252. However, the fund deducted an amount of R60 879 from his withdrawal benefit. Therefore, the fund owed him R8 627.
It was established that the deduction of the study loan from Mr A’s withdrawal benefit was not in accordance with the provisions of section 37D of the Act.
In her determination, Lukhaimane said section 37D of the Act only provided for the deduction from a member’s benefit in respect of compensation for any damage caused to the employer by reason of theft, dishonesty, fraud or misconduct by the member. The deduction of the study loan fell outside the scope of section 37D and was therefore unlawful.
“As a result of [Bokamoso’s] unlawful conduct, Mr A suffered prejudice in that he has been denied access to his full withdrawal benefit, which would have become available upon the termination of employment,” said Lukhaimane.
She added that section 7C(2) of the Act enjoined the fund to take all reasonable steps to ensure that the interest of the members in terms of the rules of the fund and the Act were protected at all times. Further, the fund had a fiduciary duty to members in respect of accrued benefits or any amount accrued to provide a benefit. The fund had failed to adhere to the Act and its rules by effecting deductions from Mr A’s benefit that were not permissible. Therefore, the fund failed in its fiduciary duties in terms of the Act.
“In light of the foregoing, the deduction from [Mr A’s] benefit was not authorised by section 37D of the Act. The fund should pay [Mr A] the amount deducted from his withdrawal benefit in respect of the study loan plus interest.
“The conduct of both the fund and the administrator is inconsistent with keeping with their fiduciary responsibilities. Such conduct must be scrutinised by the regulator as it is the regulator that permits these administrators to operate in the retirement funds sector.
“Accordingly, this determination will be made available to the FSCA together with any other information that the regulator may require in order to consider such behaviour,” Lukhaimane said.
The fund was ordered to pay Mr A the amount deducted from his withdrawal benefit in respect of study loan, with interest.
PERSONAL FINANCE