Pension Funds Adjudicator highlights 13% rise in complaints due to two-pot withdrawal challenges

The Office of the Pension Funds Adjudicator (OPFA) recorded a 13% increase in new complaints during the 2024/25 financial year, attributing part of the rise to challenges linked to the implementation of the two-pot retirement system and the withdrawal option.

According to the OPFA’s latest annual report, the pensions dispute resolution forum received 10 331 new complaints, up from 9 177 the previous year and finalised 10 100 cases. A total of 239 complaints received between September 2024 and March 2025 related specifically to the two-pot system, which came into effect on 1 September 2024.

The new system allows fund members to access a portion of their retirement savings without resigning from employment. However, the report found that some funds struggled to process the high volume of withdrawal applications. Additionally, others were unable to pay claims due to employers’ arrear contributions.

Non-compliance with Section 13A of the Pension Funds Act, which obliges employers to pay over retirement fund contributions, remained one of the biggest issues.

These cases accounted for 44.34% of all complaints investigated and closed, followed by withdrawal benefit complaints, which made up 38.79%. The report noted that the two categories often overlapped, as many employees only discovered unpaid employer contributions when attempting to withdraw their funds.

In a message in the report, Finance Minister Enoch Godongwana described the recurring issues as “of great concern”. He urged stakeholders to improve governance and administration in the sector.

“The recurrence of these issues and the high number of complaints remain of great concern, and stakeholders are urged to remediate this undesirable result of poor fund governance, management, and administration,” said Godongwana.

“This, in effect, undermines the government’s efforts as outlined in the three priorities of the Government of National Unity to reduce poverty, tackle the high cost of living, and build a capable, ethical, and developmental state,” he added.

The Private Security Sector Provident Fund (PSSPF) also contributed significantly to the increase in new complaints. The report noted that while private security employers are legally required to participate in the fund, many failed to pay over deductions made from employees’ salaries. The fund itself “does not appear to have a proper monitoring system in place” and has “consistently failed to act against defaulting employers”.

Pension Funds Adjudicator Muvhango Lukhaimane said the office remains focused on providing fair and efficient service amid the evolving pension landscape.

“Through continuous evaluation, stakeholder feedback, and agile adaptation to legislative and industry changes, including the implementation of the two-pot retirement system, the OPFA remains steadfast in its commitment to justice, fairness, and quality service for all retirement fund members,” Lukhaimane said.

The annual report also highlighted the role of the Financial Services Tribunal (FST), which allows individuals to challenge OPFA decisions at no cost. During the reporting period, 87 applications for reconsideration were lodged. Of the 83 decisions issued, 54 were upheld and 27 were remitted for reconsideration.

The report further noted that the forthcoming Conduct of Financial Institutions (COFI) Bill is expected to expand the OPFA’s jurisdiction. Senior Legal Advisor Nondumiso Ntshangase said the Bill “may affect the mandate of the OPFA by expanding the definition of ‘complaint’ to also introduce ‘advice’”. 

Deputy Adjudicator Naheem Essop added that this change could allow the OPFA to handle cases arising from poor financial advice that led to negative outcomes for fund members.

Ntshangase said the COFI Bill would further broaden the OPFA’s reach by including public sector retirement funds within its jurisdiction.

THE MERCURY