The relationship between the Pension Funds Act (PFA) and the Prescription Act has come up a few times in reconsideration applications to the Financial Services Tribunal (FST).
Sub-section 30I(1) says the Pension Funds Adjudicator shall not investigate a complaint if the act or omission to which it relates occurred more than three years before the date on which the complaint is received by him or her in writing.
Then sub-section (2) states that the provisions of the Prescription Act relating to a debt apply in respect of the calculation of the three-year period referred to in sub-section (1).
The position of the FST is the that reference to the Prescription Act relates to the calculation of the three-year period “and nothing else”.
The tribunal had occasion to point this out again when it set aside a determination by the Adjudicator and remitted the matter for further consideration.
The FST also rejected the use of the Supreme Court of Appeal (SCA) judgment on which the Adjudicator relied to conclude that the complaint was not time-barred.
Adjudicator’s determination
The complainant (“SH”), who was employed as driver, lodged a complaint with the Adjudicator on 2 February last year. SH said he joined the Transport Sector Retirement Fund in 1997. He wanted the Adjudicator to find out what happened to his contributions and fund credit between 1998 and 2007.
The Adjudicator decided that she had jurisdiction over the fund from the date on which it was registered, 25 April 2008, and could order the fund to provide information on contributions from that date.
The Adjudicator received submissions from SH’s employer, Super Rent, and the fund’s administrator, Salt Employee Benefits.
She concluded that Super Rent failed to remit contributions on behalf of SH for April to July 2008, July and August 2010, April to June 2020, and April to August 2021. The Adjudicator ordered Super Rent to pay SH’s outstanding contributions, plus late-payment interest, to the fund within one week of receiving computation from the fund.
Adjudicator cannot reformulate the complaint
Alert readers might have noticed that SH’s complaint related to contributions between 1998 and 2007, yet the Adjudicator made an order in respect of periods thereafter.
Indeed, this was one of the grounds on which Super Rent based its reconsideration application – namely, that the Adjudicator had created a new complaint, or had amended the original complaint. Furthermore, Super Rent submitted that this was compounded by a gross procedural irregularity: it had not been given an opportunity to present its case in respect of the newly formulated complaint.
The FST agreed.
It said the Adjudicator’s findings in respect of the four periods mentioned above appeared to be new complaints. “The Adjudicator did not provide [the] legal basis which empowers her to either amend or create new complaints for and on behalf of the complainant. This conduct is, in our view, unreasonable and unfair to the applicant.”
Furthermore, the Adjudicator’s findings were made without affording the applicant its right to be heard and therefore violated the audi alteram partem rule.
SCA judgment relied on by the Adjudicator
In its reconsideration application, Super Rent also submitted that sub-section 30I(1) of the PFA prevented the Adjudicator from considering the non-contribution periods before 2 February 2018, because prescription started running from that date until the date on which SH lodged his complaint with her office.
The FST’s decision discussed why the Adjudicator concluded that the complaint was not time-barred. It said she relied on the 2012 SCA case of Roestorf and Another v Johannesburg Pension Fund and Others. The tribunal quoted part of the paragraph cited by the Adjudicator as follows:
“To interrupt prescription, an acknowledgement by the debtor must amount to an admission that the debt is in existence and that he is liable therefor. The fund has satisfied both requirements each month, as it has paid the appellants’ pensions pursuant to the rules. The consequence has been a continuing and ongoing interruption of prescription in relation to every amount each appellant was entitled to claim as his correctly calculated benefit.”
The FST said it did not believe the Roestorf case was relevant to the matter before it.
It quoted the following paragraph, written by Judge Jonathan Heher, from the same judgment:
“It is no doubt possible and, perhaps, correct to regard each incorrect monthly payment as a breach of contract by the fund, which gives rise to an independent cause of action and results in a series of debts arising from month to month […] In such an event, each cause would prescribe three years from the date that it arose. I prefer, however, to approach the case from a different perspective.”
The FST said was important to understand the context of the Roestorf case to appreciate why Judge Heher adopted a “different perspective”.
According to the tribunal, the crux of the Roestorf case was the miscalculation of monthly pension benefits of two members of the Johannesburg Municipal Pension Fund. They became eligible to receive their pensions because of their total incapacity to perform their duties as employees of the City of Johannesburg. They retired in 1995.
In 2003, the fund members were advised that they were entitled to full benefits as if they had remained in the City’s employ to the age of 63. This triggered them to believe that their benefits had been incorrectly calculated. The City and the fund rejected the complaint on the basis that, among other things, the complaint had been extinguished by prescription.
The SCA stated that the fund started paying benefits in 1995 and had continued doing so. Each payment constituted a tacit acknowledgement of the fund’s obligation to pay according to its rules.
Non-contributions for specified periods
The FST said the crux of the matter before it was non-contributions or non-compliance with the fund’s rules in respect of certain specified periods.
It said Super Rent’s failure to pay monthly contributions and not comply with fund’s rules occurred more than three years from the date on which the complaint was received by the Adjudicator: 2 February 2021
“The time limit stated in section 30I of the Act, in our view, precludes the Adjudicator from investigating [the] old part of complaint for the simple reason that the act or omission to which it relates occurred more than three years before the date on which the complaint was received by the Adjudicator.
“The absence of payments of contributions or part thereof, in our view, distinguishes this case from the Roestorf case. We do not see why the Adjudicator sought to rely on the Roestorf case,” the tribunal said.
The Pension fund adjudicator is now blocking access to information when u take their REPORTS to the FST