Pension funds must repay members after misdirected payments.
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The Pension Funds Adjudicator has ruled that two retirement funds must repay members whose benefits were incorrectly paid to the wrong recipients.
In two separate rulings, adjudicator Lebogang Mogashoa, found that two pension funds failed in their legal duty to protect members’ interests and ensure benefits were paid accurately and only after proper validation.
The first complaint involved a former employee of PricewaterhouseCoopers (PwC) South Africa who worked from May 2003 to December 2007. After leaving employment, the member transferred a withdrawal benefit of over R46,000 into a preservation fund in March 2008.
More than a decade later, in November 2024, the member requested payment of his benefit. The preservation fund responded that the benefit had already been paid by cheque in December 2011, amounting to over R48,000.
The member disputed this, stating he had never applied for the withdrawal or received the cheque.
An internal investigation by the fund revealed that the employer had supplied an incorrect member number on a claim form. This error led to the member’s record being swapped with that of another individual on the administration system.
The fund attempted to prove payment by providing a bank statement showing the money left its account in December 2011. However, the statement did not identify the recipient account. The complainant submitted his own bank statement, which showed no such payment had been received.
Crucially, the fund could not produce documentary proof that the member had ever submitted a withdrawal claim form.
The adjudicator concluded that without a claim form, the fund could not have legitimately processed a withdrawal payment. Based on the available evidence, it was determined that the member had never requested his benefit.
The fund was ordered to calculate the member’s benefit as if it had remained invested from 2008 to the present and pay the full amount, including accumulated investment returns.
The second case involved a former employee of Kempston Motor Group Trust, trading as Peugeot/Citroën, who worked from April to October 2007 and was a member of the Motor Industry Provident Fund.
The member was informed that his withdrawal benefit of R17,321.40 had been paid in March 2012. However, when he requested documentation, he discovered the money had been paid into a bank account belonging to a two-year-old child.
The child was later identified as the complainant’s niece. The member stated he never signed any claim documents and that the signatures used did not resemble his own.
The fund maintained that it had received a withdrawal application with supporting documents, including a birth certificate, bank statement and a copy of the complainant’s identity document.
However, the adjudicator identified a critical flaw in the claim form. Where the bank account holder is not the member, the form requires signatures from both the member and the account holder. Instead, only one signature appeared.
The fund was asked to explain the discrepancy and provide details of the verification steps taken, but it failed to respond.
The adjudicator found that the fund had not implemented adequate systems to properly validate the claim and that the payment was likely made to the wrong person.
The fund argued that repayment should depend on the outcome of a criminal fraud investigation. The Adjudicator rejected this argument, noting that the legal standards of proof differ between criminal proceedings and pension fund adjudication.
The member’s entitlement to benefits could not be delayed pending a criminal investigation.
The fund was ordered to repay the member’s withdrawal benefit plus investment returns from March 2012 to the date of payment.
sinenhlanhla.masilela@iol.co.za
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