Some retirement funds are continuing not to make adequate use of their internal complaints resolution processes by failing to follow through on complaints or failing to keep members informed. As a result, members approach the Office of the Pension Funds Adjudicator (OPFA) with similar complaints that were referred for internal resolution, the PFA, Muvhango Lukhaimane, said in her office’s annual report for 2021/22.
“The OPFA should not be investigating complaints that can be easily resolved through the fund’s internal complaints resolution process. It is only in instances where a dispute remains unresolved after the fund has attempted to deal with same that the OPFA should get involved,” Lukhaimane said.
In March, the OPFA revised its timeframes for filing responses to complaints by requiring parties to file responses within 20 days, instead of 30, if a complaint is not resolved at the “refer-to-fund” (RTF) stage. The parties are granted a further 10 days if a response is not received within the initial 20 days.
Lukhaimane said most funds continue to fail to take advantage of the opportunity to resolve administrative issues at the RTF stage, as they do not make any attempt to engage the complainant to resolve the complaint and merely file responses to the OPFA.
At the same time, most complainants were unaware that they may first approach their fund before approaching the OPFA for relief. Further, in instances where they have done so, there was a lack of trust in the employer or fund administrator, the ombud said.
“We will strengthen our stakeholder engagement in this regard to ensure that funds remind complainants of their internal complaints management processes on a regular basis.”
Most complaints are about withdrawals and contributions
Most of the 8 382 complaints closed by the office in the year to the end of March related to withdrawal benefits (42.22%) and non-compliance with section 13A of the Pension Funds Act (40.55%), where employers failed to pay contributions and funds did not adequately discharge their obligation to ensure these contributions were collected.
“This is of great concern to the OPFA, as fund non-compliance and section 13A matters have been a consistent feature over the years and continue unabated to the detriment of pension fund members,” Lukhaimane said.
“The OPFA continues to engage funds and administrators that contribute the most to these matters and provide them with guidance on how to resolve some of the issues raised. There is regular engagement with the FSCA management on trends that emanate from the complaints management process and identification of funds that require intervention from the regulator.
“Participation in pension fund industry conferences and seminars also provided an opportunity to have the critical issues around non-compliance and delays in filing responses ventilated,” she said.
New complaints up 26%
In the 2021/22 financial year, the OPFA received 8 858 new complaints, an increase of 26% compared to the 7 014 new complaints in the previous year, when the lockdowns were implemented.
The office carried over 2 109 cases from the previous financial year.
Lukhaimane said the number of complaints received in 2021/22 was still lower than pre-Covid levels. The office received 11 179 new complaints in 2019/20 and 11 399 in 2018/19.
“We had expected a larger number of complaints due to job losses and financial difficulties by employers and funds aggravated by Covid-19, which would have had a direct impact on benefit withdrawals and employer contributions,” she said.
Of the 8 382 complaints finalised in 2021/22, 94% were wrapped up within six months. The OPFA settled 45.5% of complaints by way of formal determinations, while 28.8% were concluded by way of facilitating settlements between consumers and funds.
The office attributed the 27.25% decrease in the number of complaints settled via determinations and the 0.63% increase in settlements to the revised complaints management process that introduced RTF.
At the end of March, the OPFA had 2 559 unresolved active complaints. Of these, 102 were older than six months, which the office said, was largely due to delays by some funds in filing responses.
Private Security Sector Fund is still the main culprit
The Private Security Sector Provident Fund remained the biggest contributor to the 8 858 new complaints received by the OPFA in the financial year.
“However, following various engagements, their turnaround times continue to improve. The only outstanding concern remains the quality of responses that notably require follow-ups and the fact that the fund has failed to take advantage of the revised complaints’ management process, as there is no attempt at all on its part to resolve complaints directly with members. The quality of some of the responses continues to raise systemic problems with fund governance and administration,” Lukhaimane said.
The Chemical Industries National Provident Fund contributed to the delay in finalising some of the complaints.
“During several meetings with the principal officer of the fund, concerns were raised, ranging from data issues, poor service and failure of the previous administrator to issue proper benefit statements to members. However, the fund or its board has a duty to exercise an oversight function over its administrator and to keep proper records of the operations of the fund. Further, the fund has to conduct due diligence when appointing an administrator, especially when there have been persistent issues relating to an administrator. The fund’s lapses in this regard were reported to the FSCA, and there is continued engagement concerning the matter,” the PFA said.
