The Pension Funds Adjudicator must reconsider a determination in which she ordered the former administrator of the Tshwane University of Technology Pension Fund to pay the fund more than R1.2 million, plus interest and expenses.
The fund complained to the Adjudicator in 2021, alleging that incorrect calculations by Moriting Wealth Managers (Pty) Ltd resulted in a loss of benefits for members invested in the Sanlam Monthly Bonus Fund (SMBF).
Moriting filed a reconsideration application with the Financial Services Tribunal (FST), saying the Adjudicator issued her final determination without affording it an opportunity to make submissions on her preliminary findings. It said the Adjudicator’s office had used an incorrect email address when it supposedly sent the preliminary determination to Moriting.
The Adjudicator admitted it had mistakenly emailed the preliminary determination to the wrong address. It therefore agreed that the determination should be remitted and Moriting given an opportunity to state its case.
Although the Adjudicator’s agreeing to have the matter remitted settled the reconsideration application in Moriting’s favour, the tribunal saw fit to set out the substantive aspects of the dispute and make certain comments.
The nature of the dispute
According to the FST, the common cause facts were as follows:
Moriting was the administrator of the Tshwane University of Technology Pension Fund from January 2017 to February 2020.
In March 2020, the fund informed Moriting that it had become aware of an “administrative error” in the determination of the members’ share in respect of members invested in the SMBF.
The fund contended that, with the assistance of an actuary, it had identified that Moriting had calculated the unit prices incorrectly, which resulted in an incorrect benefit calculation from 1 January 2017 to 28 February 2018.
The fund demanded that Moriting pay the shortfall, as well as the cost of the actuary’s report and a report by a valuator. Whereas the fund previously qualified for a valuation exemption and no actuarial evaluations were necessary, the fund said it had to conduct an actuarial valuation because of what it described as maladministration.
Moriting responded in April 2021. It disputed the fund’s allegations and proposed that another valuator should investigate the matter.
The matter remained unresolved, and the fund lodged a complaint with the Adjudicator in August 2021.
As part of her investigation, the Adjudicator appointed an independent actuary to provide advice and an opinion.
The report, dated March 2022, by Adjudicator-appointed actuary stated that:
- The actuary had relied on the calculations performed by the fund’s actuary in so far as the correction of the members’ share was concerned.
- The fund suffered a loss of R1 120 991, which amount was required to rectify the members’ share in respect of members invested in the SMBF. The members’ share had to be increased so that members could receive the benefits they were due in terms of the fund’s rules.
- The increase could be met using the assets of the SMBF. However, there were no surplus assets in the fund to meet this loss.
- The fund incurred fees in the recalculation of member benefits and in carrying out the statutory actuarial evaluation.
In its response to the report, Moriting said:
- The Adjudicator-appointed actuary should have engaged with it to determine how the daily unit pricing was done.
- The SMBF did not provide daily unit prices, so the monthly bonus rate had to be converted to daily unit prices.
- The finding that the fund had no surplus, while members’ benefits were understated, suggested the error lay elsewhere, and therefore Moriting was not at fault.
- The costs claimed were unjustified.
In June 2022, the Adjudicator ordered Moriting to pay the fund R1 221 229, plus interest of 7% a year calculated from date of the determination. Moriting was also ordered to pay R374 500, which were the costs incurred by the fund for the actuary’s services, the valuation, and recalculating the benefits.
Moriting will be able to state its case
The tribunal said further submissions suggested there is a dispute between the parties over the methodology employed by Moriting in dealing with the conversion of the investment returns into the unit prices.
The independent actuary stated that Moriting’s unit prices were incorrect regardless of how they were determined because they did not correlate with the actual returns earned by the portfolio. It was therefore unnecessary for him to engage with Moriting to understand how it determined the unit prices.
Moriting maintained that the fact that the independent actuary held there were no surplus funds, while the benefits of members are understated, suggested there was a different error.
Faced with such a dilemma, it said the Adjudicator could have conducted an oral hearing or used its powers under section 30J(3) of the Pension Funds Act.
The FST it was not necessary for it to determine that issue because the Adjudicator has conceded that the matter ought to be remitted for reconsideration. Once the matter is remitted, the Adjudicator is vested with a discretion concerning the conduct of the proceedings.
Once the matter is remitted, Moriting will be afforded an opportunity to deal with the preliminary determination, and if necessary, with any other important issue that bears on the preliminary findings of the Adjudicator.
The FST upheld the reconsideration application and set aside the Adjudicator’s determination.
