A provident fund that withheld payment of a withdrawal benefit on the basis that the member had defrauded the company has been ordered by the Pension Funds Adjudicator to request the complainant to place her version of events before it.
Muvhango Lukhaimane ordered the Sanlam Umbrella Provident Fund to first consider the complainant’s representations and then decide whether it should continue to withhold the benefit.
The complainant submitted that she resigned in April 2024 after 15 years and the employer withheld payment of her withdrawal benefit of R538 771.53 on the grounds that she had committed fraud at her place of employment.
The fund stated that it had established from the employer that summons had been issued against the complainant for alleged fraud. The fund stated that in terms of section 37D of the Act, it may withhold payment of the complainant’s withdrawal benefit in accordance with the Act.
The employer submitted that it has claimed damages from the complainant which were caused by reason of theft, dishonesty, fraud or misconduct. Therefore, the employer sought to withhold the complainant’s withdrawal benefit.
In her determination, Ms Lukhaimane said as a general principle of law, pension benefits are not reducible, transferable, or executable save for certain exceptions. In this case, the fund was entitled to deduct any amount due by a member to his employer in respect of 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 any court.
Ms Lukhaimane said the employer averred that the complainant submitted fraudulent payment instructions and bank account details to the employer. The employer, relying on the complainant’s fraudulent misrepresentations, authorised several payments to bank accounts belonging to a third party in the amount of R891 373.79. The employer stated that the bank accounts into which the refunds were paid belonged to the complainant’s partner. Further, the complainant’s residential address is linked to most of the bank accounts.
She said case law made it clear that a fund must weigh the competing interests of the parties after affording a member the opportunity to place his/her case properly before the fund. This is also to ensure that a fund does not abuse the system or merely rubber-stamps the employer’s request to withhold a member’s benefit without any investigation into the merits of the allegations or the financial prejudice a member may suffer.
“In this instance, the employer instituted criminal and civil proceedings against the complainant. However, the fund failed to put the employer’s case to the complainant, nor did it afford the complainant an opportunity to place her case properly before it.
“Pursuant to this failure, the board of management of the fund did not apply its mind appropriately, impartially, and in a balanced manner. Without same, the fund was incapable of balancing the competing interests of the parties before arriving at its decision to withhold.
“Thus, the fund exercised its discretion improperly. It is clear that the employer made out a prima facie case on the preponderance of probability.
“Failure of the fund to comply with its duties constitutes a breach of its legally prescribed obligations. The fund’s conduct should not prejudice the employer. The complainant should be afforded an opportunity to respond to the fund. Therefore, the matter should be referred back to the fund,” said Ms Lukhaimane.
The fund was ordered to request the complainant to place her version of events before it in writing and the fund must consider the complainant’s representations and decide on whether it should continue to withhold the complainant’s benefit and inform the parties accordingly.
ABOUT THE PENSION FUNDS ADJUDICATOR
The Office of the Pension Funds Adjudicator (OPFA) is a statutory body established to resolve disputes in a procedurally fair, economical, and expeditious manner. The adjudicator’s office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. For general enquiries or to lodge a complaint visit www.pfa.org.za, call 012 346 1738 or email Enquiries@pfa.org.za
Issued on behalf of the Pension Funds Adjudicator by:
Yogin Devan – Meropa Communications
(031) 201 0550 / 083 326 3962