The delayed payments of death and retirement benefits by funds to members and beneficiaries is concerning. This is according to the 2015/2016 Annual Report released by the Office of the Pension Funds Adjudicator (OPFA). According to the report, there were 9,667 new complaints lodged during 2015/2016, a 37.9% increase from the previous year.
Pension Funds Adjudicator Muvhango Lukhaimane, noted in the report: “As in prior years, complaints relating to withdrawal benefits - especially delays in the payment of benefits and disputes over the quantum of benefits - represented almost 70% of all complaints finalised. It is clear that inefficient administration processes are often the cause of delay in the payment of benefits, especially resignation benefits.”
Delayed payments
According to the report, the bulk of complaints indicated that benefits are paid out anywhere between three months and six years after they become due, with the bulk of withdrawal benefits being paid after more than six months after they are due.
When asked why it takes so long for some funds to pay out benefits, the OPFA said: “Mostly from the complaints that we receive, the funds just do not commence the investigations on time, i.e. immediately upon the passing of the deceased. Once the funds commence these investigations, they are not proactive in actually carrying out an investigation. They rely on the employer and some of the beneficiaries and family members for information – which is not what the [Pension Funds] Act requires. The Act requires the board to carry out the investigation. Where funds also receive contradictory information, they must first verify such.”
Lukhaimane stressed that according to the Pension Funds Act, the finalisation of section 37C states that investigations should be within the proscribed 12 months after the death of the member. Where benefits are not paid out to beneficiaries within the 12 months following the death of the member, there are repercussions for the fund in question.
The OPFA explained: “When a complaint is lodged, and depending on the causes for the delay, this office has started levying compensatory damages in the amount not exceeding 10% of the benefit payable – especially where the fund does not even attempt to provide reasons for the delay (funds used to just state that the benefit continues to accrue interest until paid, however, for us this is not enough as the beneficiaries are being denied use of the funds anyway. The interest is theirs anyway).”
The use of tracers to lodge complaints
In addition to the rise in complaints, the OPFA is also concerned about the increase in the number of complaints lodged by tracers. A tracer is a person who is paid by a beneficiary to lodge a complaint and assist the beneficiary in getting the benefits due to them. However, the tracer has no knowledge while doing this as to whether or not a benefit exists.
Lukhaimane said: “This is an unwelcome development as funds are required in terms of the Act to inform members of the existence of this Tribunal and the fact that the service that is provided is free.
“Funds are, therefore, requested to increase their communication about the existence of the OPFA and to publicise unclaimed benefits so that people do not fall prey to unscrupulous operators that have no business within the pension funds industry,”
She added: “The OPFA had to take a decision to stop taking enquiries from tracers and indicating to them that the complainants should lodge the complaints directly with the office.”
For more information on the Pension Funds Adjudicator or to lodge a complaint, click here.
