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Adjudicator warning latest: Your employer can’t just withhold your pension

The Pensions Fund Adjudicator has ordered a firm to pay up the pension it withheld from a staff member after raising an allegation of fraud.

DA ANC elections public wage unions

Photo: File

The Pension Funds Adjudicator has ordered the Alexander Forbes Retirement Fund to pay out a complainant’s withdrawal benefit which he became entitled to in 2013.

The reason provided by the fund for not paying the benefit was that the withdrawal form had not been signed by the complainant’s employer, Scoin Trading (Pty) Ltd.

The complainant stated that he completed the withdrawal claim form in 2017, however, the employer refused to sign the document. He further stated that he last completed the withdrawal claim form which was provided to him by the fund in January 2021, but to no avail.

 The fund stated that at the time it had received the complaint, that it was not in possession of his withdrawal claim form. It stated that it had contacted the employer and informed it to urgently submit the complainant’s claim form. However, it had yet to receive a response.

 The fund stated that it was yet to receive a specific reason from the employer for refusing to sign the complainant’s withdrawal benefit and requested that the adjudicator dismiss the complaint against it. 

In a response to the complaint, the fund stated that an incident of fraud had occurred within the department managed by the complainant and that the employer would like to recover the loss it had incurred from the complainant’s withdrawal benefit.

 The adjudicator found that the facts indicated that the fund did not receive any instructions from the employer to withhold the complainant’s withdrawal benefit and the complainant was not aware of the alleged fraud allegations that had been levelled against him.

 The employer had not even lodged a criminal case against the complainant nor advanced any case that warrants the withholding of the complainant’s withdrawal benefit.

 The employer’s submissions were found to be without any merit. Almost eight years had passed since the complainant left his job and the adjudicator found that there had been a clear abuse of process by the employer.

 The determination comes at a time in the retirement funds industry where the issue pertaining to the withholding of withdrawal benefits at the behest of the employer has sparked debate. 

Several adjudicator findings as well as that of the Financial Services Tribunal have found that in order to prevent abuse of the process by the employer, funds must act with care and consider representations by the member about why the benefit should not be withheld. The current determination is a prime example of how this process can be abused.

The adjudicator ordered the complainant to provide the fund with all documents necessary for his benefit to be paid and ordered the fund to make payment thereafter of the benefit together with interest.