The Pension Funds Adjudicator Lebogang Mogashoa is intensifying efforts to ensure compliance among retirement funds and administrators, addressing delays and inadequate responses to member complaints. New enforcement measures are being introduced to uphold accountability in the sector.
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The Pension Funds Adjudicator has announced that it is taking steps to compel retirement funds and administrators that fail to respond to complaints to cooperate with its investigations, as concerns mount over non-compliance within the sector.
Pension Funds Adjudicator Lebogang Mogashoa says his office is increasingly encountering funds and administrators that ignore complaints, delay responses, or submit inadequate replies that do not address the substance of the issues raised. This, he says, undermines the effective functioning of the Office of the Pension Funds Adjudicator (OPFA).
“As regulations evolve to place greater emphasis on effective complaints handling and governance in the financial services sector, it is becoming even more important for retirement funds and administrators to put in place measures to ensure that member complaints are addressed effectively,” Mogashoa says.
Speaking at the 30th Annual Pension Lawyers Association Conference, Mogashoa says his office is working on measures to deal decisively with such conduct. He confirms that a Senior Counsel’s opinion has been obtained on the use of section 30J of the Pension Funds Act to strengthen the office’s enforcement powers.
“This provision empowers the Adjudicator to adopt 'any procedure which he or she may consider appropriate in conducting an investigation, including procedures in an inquisitorial manner’. The provision also states that certain sections of the Commissions Act of 1947 apply to investigations by the Adjudicator,” he says.
According to Mogashoa, Senior Counsel has advised that, given the provisions of section 30J, the Adjudicator is empowered to issue summons and subpoenas in terms of the Commissions Act against funds and administrators that fail to file responses to ensure that investigations proceed smoothly. He says such summons will be directed at the Principal Officer and Chairperson of the Board of the offending fund, ensuring accountability at the highest level.
“Defying the summons or subpoena issued by the Adjudicator is a criminal offence, and compliance may be enforced through the criminal justice system and through civil contempt proceedings. Work will begin on ensuring that the office sets up the infrastructure required for these processes, as advised by Senior Counsel,” he says.
Mogashoa notes various external factors affecting the work of his office, such as the economic environment leading to member withdrawals from retirement funds, growing awareness among pension consumers of their rights, greater familiarity with the Ombud system, and increasingly sophisticated complaints.
He says his office remains committed to the strategic goal of resolving as many complaints as possible within six months, with internal processes continually reformed to enhance efficiency.
“While walk-ins remain popular, the OPFA currently has its office in Pretoria and a physical access point in Johannesburg, with plans to expand physical access within five years to cater for complainants who still prefer walk-ins. Mogashoa stressed that attracting, developing, and retaining skilled staff is critical to ensuring the OPFA operates like ‘a well-oiled machine’,” he says.
Turning to legislative reform, Mogashoa highlights the Conduct of Financial Institutions (CoFI) Bill, which will replace fragmented, industry-specific laws with a single, comprehensive market conduct framework under the “Twin Peaks” model. This legislation is expected to broaden the jurisdiction of his office and will require meticulous preparatory work.
“51% of complaints finalised in the recently concluded financial year relate to Section 13A, which obliges employers to pay employee pension contributions to funds. Too many employers are failing to comply, with some workers resorting to the OPFA’s anonymous tip-off line for fear of reprisals.
“Once largely confined to the security industry, Section 13A complaints are now surfacing in umbrella funds and municipal funds. Increasingly, funds themselves are lodging complaints on behalf of members, though some delay submissions, leading to time-barred claims. Others avoid requesting Section 13A orders against responsible persons to protect client relationships, a conduct Mogashoa describes as a conflict of interest, given funds’ fiduciary duty to members,” he says.
On Section 37C, which governs the distribution of death benefits, Mogashoa notes delays caused by funds “simply sitting back and waiting” for information instead of actively investigating and seeking information. He cites a case unresolved since a member died in 2000. He calls on funds to conduct proper investigations of death claims and to take steps to validate dubious information gathered during investigations, rather than blindly relying on affidavits.
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