Abstract

Keywords

Pension deduction; administrative action; withholding of benefits; Pension Funds Act.

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1 Introduction

In November 2019 Lesotho adopted the Pension Funds Act 5 of 2019 (hereafter the PFA 2019) to modernise the regulation and supervision of private pension funds. 1

 Prof Mtendeweka Mhango. Metropolitan Research Chair and Professor, School of Law, University of Limpopo, Polokwane, South Africa. E-mail: Mtendeweka.mhango@ul.ac.za. ORCID: https://orcid.org/0000-0001-7976-4473.This work is based on the research supported in part by the National Research Foundation of South Africa (Ref Numbers KIC24080625611)”.

 Mr Teron Rikhotso. LLB, LLM. Lecturer, School of Law, University of Limpopo, Polokwane, South Africa. E-mail: teron.rikhotso@ul.ac.za. ORCID: https://orcid.org/0000-0002-7662-3736.

We would like to express our sincere gratitude to the editorial team and the reviewers for their insightful comments, constructive feedback, and thorough review of our manuscript. Their invaluable contributions have significantly improved the quality of this article. We deeply appreciate the time and effort they invested in refining our work, and we are grateful for their dedication to enhancing the standards of academic research.

1 Pension Funds Act 5 of 2019 (hereafter the PFA 2019).

Given that the PFA 2019 is new and has not been widely interpreted by the courts, this article examines the deduction provisions in the PFA 2019 by drawing lessons from South Africa and Eswatini. The objective is to highlight lessons that Lesotho can learn about how these provisions can be interpreted to achieve the legislative goals. The article argues that some of the legal outcomes in Lesotho in the interpretation of the pension legislation will be identical to those in South Africa due to the similarities in the legislative provisions. While this article is not a comparative study, it will draw lessons from other jurisdictions in the Southern African Development Community region to support its argument.

The article comprises five sections. Section 1 is the introduction. Section 2 discusses the legal framework governing deductions in the PFA 2019. Section 3 discusses the purpose behind the deduction provisions, which grant power to a pension fund to deduct from a member's pension fund benefits. Section 4 discusses some of the limitations placed on the power of a pension fund to deduct from pension benefits. Section 5 discusses some of the jurisprudence that has emerged in South Africa and Eswatini on pension deductions. From this jurisprudence selected principles have been developed by the Adjudicator and the courts, which we highlight so that they can be applied in Lesotho.

2 The legal framework governing deductions from pension benefits in Lesotho

The PFA 2019 is the default legislation that sets out national standards for regulating all pension funds in Lesotho. Section 3 of the PFA 2019 captures this principle, including its exception. It provides that:

3. Application of the Act

(1) The Act shall apply to all pension funds in Lesotho.

(2) Where a pension fund is subject to the provisions of any other law specifically applicable to such pension fund, the provisions of this Act which would otherwise apply to such pension fund shall not apply wherever those provisions would be inconsistent with any such law.

The above provision is designed to manage the relationship between pension funds established and regulated by the PFA 2019 and those established and regulated by other statutes. A few public sector pension funds, the main ones being the Public Officers' Defined Contribution Pension Fund and the Specified Offices Defined Contribution Pension Fund, are established and primarily regulated by their own statutes. 3

3 Public Officers' Defined Contribution Pension Fund Act 8 of 2008 (hereafter the PODCPFA); and the Specified Offices Defined Contribution Pension Fund Act 19 of 2011 (hereafter the SODCPFA).

40(1) Notwithstanding the rules of a fund, except for deductions permitted in terms of section 33, amounts paid as contributions to a fund in respect of a member, entitlement to benefit in a fund, and amount paid out of a fund by way of benefits in respect of a member shall not –

(a) be assigned, transferred, pledged, charged or otherwise become subjects to a security interest, however described; or

(b) be liable to be attached, sequestrated, or levied upon for or in respect of any debt or claim.

(2) A fund shall not recognise, or in any way encourage or sanction, a purported assignment, transfer of, or granting of a pledge, charge or other security interest, however, described, in respect of entitlement to benefits by a member.

As noted earlier, section 40 is an important general provision that reflects the preservation measures that drove the need for the adoption of the PFA 2019. Three distinct but related protections are incorporated in section 40 against an assignment or pledge of the contributions to and benefits in the fund. The first protection relates to the amount of money paid into the fund as contributions by the member, employer or both. This protection extends to a member's right to have access to these contributions. 5

5 Hunter et al Pension Funds Act 664.

The second protection included in section 40 of the PFA 2019 is members’ entitlement to benefits in a pension fund. This protection extends to members and their beneficiaries. Members of pension funds are entitled to benefits in terms of the rules of the fund after the occurrence of a specific event, which is usually retirement, disability, death or resignation. 8

8 Joint Municipal Pension Fund v Grobler 2007 5 SA 629 (SCA).

The third protection included in section 40 is the amounts of money paid out of the pension fund as a benefit in respect of the member. These protected amounts of money can be in the form of lump-sum and/or regular payments. 10

10 Hunter et al Pension Funds Act 666.

Despite these protections, section 33 of the PFA 2019 confers on the fund the power to deduct from pension benefits under limited circumstances. Section 33 provides as follows:

33. Allowable deductions from pension benefits

A fund may deduct an amount from the benefit of a member in respect of–

(a) maintenance of dependants of a member by court order;

(b) a debt arising from a housing loan issued or guarantee granted by the fund in respect of a housing loan of that member;

(c) an amount for which the employee is liable under a guarantee issued by the employer for the purposes of obtaining a housing loan; and

(d) an amount representing the loss suffered by the employer due to any unlawful activity of the member for which judgement has been obtained against the member in a court of law or a written acknowledgement of culpability has been signed by the member before a commissioner of oaths.

Section 33 is an exception to section 40 because it permits pension funds to deduct from the pension benefits if certain requirements are met. Similar provisions can be found in all modern pension legislation, including in South Africa and Eswatini, where jurisprudence has emerged to interpret the scope of those provisions. 11

11 See ss 37A and 37D of South Africa’s Pension Funds Act 24 of 1956; ss 31 and 32 of Eswatini’s Retirement Funds Act 5 of 2005 (RFA 2005); and ss 49 and 52 of Botswana’s Retirement Funds Act 38 of 2022 (RFA 2022).

3 The purpose of the deduction provision: Lessons from South Africa and Eswatini

As in Lesotho, section 37A of the South African Pension Funds Act 24 of 1956 (hereafter the PFA 1956) provides a general protection of pension fund benefits where, as a general rule, pension benefits are not reducible, transferable or executable save for certain exceptions as outlined by sections 37A and 37D of the PFA 1956. In this sense, section 37D is South Africa's equivalent to Lesotho's section 33 of the PFA 2019. Section 37D(a) and (b) of the PFA 1956 has a wider reach than section 33 in that it provides eight grounds for permissible deductions, while there are only four grounds for permissible deductions in Lesotho under the PFA 2019. One of the most litigated and academically commented upon deduction provisions in the PFA 1956 is section 37D(1)(b), which provides that:

(1) A registered fund may–

(a) …

(b) deduct any amount due by a member to his employer on the date of his retirement or on which he ceases to be a member of the fund, in respect of–

(i) …

(ii) compensation (including any legal costs recoverable from the member in a matter contemplated in subparagraph (bb)) in respect of any damage caused to the employer by reason of any theft, dishonesty, fraud or misconduct by the member, and in respect of which –

(aa) the member has in writing admitted liability to the employer; or

(bb) judgment has been obtained against the member in any court, including a magistrate's court, from any benefit payable in respect of the member or a beneficiary in terms of the rules of the fund, and pay such amount to the employer concerned.

An important case that first interpreted the above provision is Appanna v Kelvinator Group Services of SA Provident Fund. 12

12 Appanna v Kelvinator Group Services of SA Provident Fund (Appanna v Kelvinator) 2000 2 BPLR 126 (PFA).

The purpose of … section 37D(1)(b)(ii) of the Act is to protect an employer's right to pursue recovery of misappropriated monies. In order to give effect to that purpose, the provision for deduction should be interpreted to impliedly include the power to withhold payment of the benefit pending the determination or acknowledgment of liability. 13

13 Appanna v Kelvinator para 129. See also Buthelezi v Municipal Gratuity Fund 2001 5 BPLR 1996 (PFA); and Shrosbree 2005 ILJ 19-20.

Even though Appanna v Kelvinator Group Services of SA Provident Fund was decided in 2000, it has consistently being cited as a leading authority for the proper interpretation of the deduction provisions by the Adjudicator and the courts. 14

14 For recent Adjudicator cases citing Appanna v Kelvinator, see Van Schalkwyk v DSV Flexi Retirement Fund Pension Section 2024 2 BPLR 39 (PFA) paras 5.5, 5.9; Adam v Consolidated Retirement Fund for Local Government 2023 1 BPLR 1 (PFA) paras

Despite recognising an implied discretion to withhold pension benefits, the court held that pension funds do not have absolute discretion to withhold benefits. 19

19 Highveld Steel v Oosthuizen para 20.

The decisions in Appanna v Kelvinator Group Services of SA Provident Fund and Highveld Steel v Oosthuizen were followed in Eswatini. In the case of Standard Bank v Motsa, the High Court of Eswatini had to interpret section 32(2)(a) of Retirement Funds Act 5 of 2005 (RFA 2005), which has the same wording as section 33(d) of the PFA 2019. Section 32(2)(a) provides that:

(2) A retirement fund may deduct an amount from the member's benefit in respect of:

(a) an amount representing the loss suffered by the employer due to any unlawful activity of the member and for which judgement has been obtained against the member in a court or a written acknowledgement of culpability has been signed by the member and provided that the aforementioned written acknowledgement is witnessed by a person selected by the member and who has had not less than eight years of formal education. 21

21 Section 32(2)(a) of the RFA 2005.

The court reasoned that the object of this provision is to protect employers’ interests by giving them rights to pursue and recover money misappropriated by their employees. 22

22 Standard Bank v Motsa para 36.

4 Limitations on the discretion to deduct from pension benefits

Three years before Highveld Steel v Oosthuizen was decided, Shrosbree, then a Senior Assistant Adjudicator, made a convincing argument for the reform of section 37D(1)(b) of the PFA 1956. 24

24 Shrosbree 2005 ILJ 17; also see cl 48 of the Draft Conduct of Financial Institutions Bill, 2020 (proposing changes to the deduction provisions in the PFA 1956).

The first consideration is that a pension fund is not compelled to deduct or withhold benefits even when all the requirements set out in the deduction provision are met. In other words, the deduction or withholding of benefits is not a guaranteed remedy available to the employer. The word "may" in section 33 of the PFA 2019, and also in section 37D of the PFA 1956 and section 32 of the RFA 2005, is an indication that the board of trustees of a pension fund has discretion to decide whether to deduct or withhold pension benefits, based on the circumstances of each case. 28

28 South African Broadcasting Corporation SOC Limited v South African Broadcasting Corporation Pension Fund 2019 4 SA 608 (GJ) para 3; Manamela 2013 SAMLJ 586 (arguing that the trustees of the fund are not bound to withhold the benefit but they have discretion to do so that must be exercised properly).

the Fund is not the agent of the employer and is not supposed to act in the interests of the employer and as far as issues between employer and member are concerned, it should act independently. 32

32 Anax Logistics Services (Pty) Ltd v Qubeka (PFA95/2020) [2021] ZAFST 121 (28 April 2021) para 11; Fundsatwork Umbrella Provident Fund v Ngobeni (PFA64/2020) [2020] ZAFST 6 (3 December 2020) (Fundsatwork v Ngobeni) para 6.

Hence, it is submitted that an explicit withholding provision in section 33 of the PFA 2019 or in the rules of the fund would provide certainty and effective protection of the employer's interests against an employee's unlawful activity, and vice versa. Given the established judicial opinions that confirm the power to withhold benefits, it is submitted that pension funds in Lesotho should expressly regulate the right and power to withhold pension benefits in their rules. 33

33 Highveld Steel v Oosthuizen; Standard Bank v Motsa; Hansen Genwest (Pty) Ltd v Corporate Selection Umbrella Retirement Fund 2023 ZAGPJHC 96 (where a pension fund adopted rules to regulate the power to withhold benefits); and Dakin v Southern Sun Retirement Fund 1999 9 BPLR 22 (PFA) (Dakin v Southern Sun Retirement Fund) 24 (where the rules regulated the withholding of benefits where a member is suspected of having caused damage to the employer, provided that a civil action was immediately instituted and that the employer was not responsible for any delay in the proceedings).

The second consideration is that pension funds are not permitted to withhold benefits indefinitely or without qualification. This results from a decision by the Adjudicator in Anstey v Pegasus III Provident Fund, 34

34 Anstey v Pegasus III Provident Fund 2000 2 BPLR 119 (PFA) (Anstey v Pegasus).

Furthermore, in Dakin v Southern Sun Retirement Fund 42

42 Dakin v Southern Sun Retirement Fund para 27. Also see Shrosbree 2005 ILJ 21 (discussing Dakin v Southern Sun Retirement Fund).

The Adjudicator directed the fund to amend its rules by giving members the right to disinvest their benefits from the fund's portfolio and to invest them at an agreed rate of interest or to hedge the investment performance of the assets concerned. 45

45 Dakin v Southern Sun Retirement Fund para 28.

More recently, in Ncobela v Edcon Provident Fund the Adjudicator found that the decision to continue to withhold benefits after criminal charges lodged by the employer had been withdrawn was reasonable. The participating employer was proactive is giving the fund progress reports, which the Adjudicator found demonstrated a genuine interest by the employer to finalise the matter. 48

48 Ncobela para 5.5.

The considerations from the above cases make a strong case for the legislature in Lesotho to explicitly legislate on the authority of pension funds to withhold pension benefits because of the numerous unintended consequences that may arise. Alternatively, the Regulator in Lesotho could control this area through regulations that could require pension funds to expressly address in their rules the power to withhold benefits. 50

50 Section 12(p) of the PFA 2019: "The rules of a fund shall be written in the English Language and shall, subject to this Act and the regulations, state … such other requirements as may be prescribed by the Regulator." For more information about subsidiary legislation and the exercise of powers, see parts V and VI of the Interpretation Act 19 of 1977.

5 Emerging jurisprudence on pension deductions

Rich jurisprudence and academic studies have developed around the interpretation and application of the power to deduct or withhold pension benefits in South Africa and Eswatini. This jurisprudence offers lessons of interpretation for Lesotho, especially because of the similarities in the legal traditions and legislative frameworks of the three countries. From the interpretation of the deduction provisions by courts and tribunals in South Africa and Eswatini, several useful principles have been established and applied to regulate the power to deduct. We discuss at least six principles, which are not exhaustive but represent a potential area from which lessons for Lesotho can be drawn.

The first principle, developed in Eswatini, is that pension benefits may be deducted or withheld not only during the lifetime of the pension fund member but also after the member’s death. Before 2012 it was not certain whether, after the death of a pension fund member, a pension fund in Eswatini was permitted to deduct money from a member's fund account and pay it over to an employer as compensation for embezzlement. This question was tested and answered affirmatively in Standard Bank v Motsa. This case has been thoroughly discussed and interpreted. 52

52 Mhango and Mosito 2023 LDD 183-213.

The dependants and the executors of Mr Motsa's estate objected to the bank's attempts, arguing that the deduction provision in section 32 of the RFA 2005 applied only to a member who is alive and who is exiting the fund because of resignation, dismissal or retirement. Since the member in this case did not resign, retire or get dismissed, section 32 could not be applied to deduct from the employee's death benefits. The court dismissed this argument. The court reasoned that since the misconduct resulting in loss to the employer could be discovered only after a member's retirement, dismissal or death, a rigid interpretation of section 32 of the RFA 2005 limiting its application to circumstances where the member is alive would defeat the intention of Parliament. 56

56 Standard Bank v Motsa para 31.

As pointed out earlier, the purpose of the deduction provisions is to protect an employer's financial interests in recovering misappropriated funds by allowing such an employer to deduct from an employee's pension fund account any money that has been misappropriated by an employee. The nub of the court's reasoning in Standard Bank v Motsa is that it does not matter whether a deduction is made after the employee has died, resigned, retired or been dismissed. According to the court, what the legislature wants to achieve is compensation for the employer for the financial loss resulting from misconduct committed by its employee. Whether the misconduct is discovered before or after the death of the employee is beside the point. The position of the court in Standard Bank v Motsa was that the legislature could never have intended to allow deductions only against a member or employee who is alive, as opposed to one who is deceased. The court reasoned that if this had been the case, the legislature would have made this unambiguously clear. 57

57 Standard Bank v Motsa paras 29-32.

where a member has died without acknowledging culpability or without a judgment against him, and his employer proceeds against his estate, dependants or beneficiaries who are by the rules of the Act liable to be deducted. 58

58 Standard Bank v Motsa para 32.

The effect of this ruling is that deduction provisions in Eswatini will be understood to apply when a member ceases to be a member of the fund, whether due to death, resignation, dismissal or retirement. We submit that this principle should apply to circumstances in Lesotho.

The second principle, developed in South Africa through judicial and tribunal interpretations of the deduction provisions, is that the deduction or withholding of benefits must be made in connection with a benefit that has accrued or is due for payment to a member upon the member’s exit from the fund, in accordance with the rules. 59

59 Records v Barlows Pension Fund 2000 8 BPLR 920 (PFA) paras 26-30 (holding that an actuarial reserve value is not a benefit payable and may not be the subject of deduction). See Shrosbree 2005 ILJ 22 for a discussion of this case.

The third principle is that the decision to deduct from or withhold pension benefits amounts to administrative action. This is because such a decision is predicated on an empowering legislative provision and constitutes an exercise of public power or a performance of a public function by the board of a pension fund. 61

61 SA Metal Group (Pty) Ltd v Jeftha 2020 1 BPLR 20 (WCC) (SA Metal Group v Jeftha); Fundsatwork v Ngobeni para 14; Mbatha v Transport Sector Retirement Fund (0016223/19) [2020] ZAGPJHC 18 (19 February 2020) paras 9-10 (the judge holding that "I subscribe to the generally accepted view that a decision of the board of a pension fund taken in terms of section 37C of the PFA 1956 constitutes administrative action for the purposes of the Promotion of Administrative Justice Act 3 of 2000 (PAJA) and that PAJA applies to such a review"); Titi v Funds at Work Umbrella Provident Fund (1728/2010) [2011] ZAECMHC 22 (10 March 2011) (holding that a pension fund, when acting in terms of the provisions of the PFA 1956 and administering the funds on behalf of its members, exercises public power. The decisions that it is empowered to take in terms of s 37C of the PFA 1956, and the power to effectively override the express wishes of its members, may conceivably affect members of the public. Any decision made in pursuance thereof and which could negatively affect members of the public would, therefore, be subject to judicial scrutiny and review in terms of the provisions of PAJA. The applicant was, therefore, entitled to a reasonable opportunity to make representations.) Also see Johannesburg Stock Exchange v Witwatersrand Nigel Ltd 1988 3 SA 132 (AD) 152E-I (affirming the view that the JSE performs functions that affect the public and indeed the whole economy and therefore decisions made by the JSE are subject to judicial review).

I agree with the argument of Mr Freund SC that one can safely assume that the employer's case, as related to the fund, must be put to the employee to afford him an opportunity to respond thereto before the fund should assume the liberty to take a decision impacting on the rights of the employee. I believe especially so where there is a spirited defence by the employee, as in the matter before me. The question remains whether the fund applied their mind appropriately, impartially and in a balanced manner. 67

67 SA Metal Group v Jeftha para 62.

The Financial Services Tribunal has followed this decision and reasoning. 68

68 Fundsatwork v Ngobeni para 14.

The fourth principle is that a pension fund is permitted to withhold pension benefits only pending the finalisation of civil proceedings, 70

70 Highveld Steel v Oosthuizen para 19 (reasoning that "[i]t seems to me that to give effect to the manifest purpose of the section 37D(1)(b), its wording must be interpreted purposively to include the power to withhold payment of a member's pension benefits pending the determination or acknowledgement of such member's liability. The Funds therefore had the discretion to withhold payment of the respondent's pension benefit in the circumstances. I daresay that such discretion was properly exercised in view of the glaring absence of any serious challenge to the appellant's detailed allegations of dishonesty against the respondent.")

deals with two situations, namely an admission of liability … and a civil judgment. Highveld Steel and Vanadium Corporation Ltd v Oosthuizen (103/2008) [2008] ZASCA 164 … dealt with the withholding of payment pending the finalisation of civil proceedings. It did not hold that a Fund is entitled to withhold payment because a criminal case has been opened or even upon conviction. A conviction is not a judgment against a member that quantifies compensation in respect of damage caused, and costs are not awarded against persons convicted. 72

72 Fundsatwork v Ngobeni para 12. Also see Mpuru v Corporate Selection Umbrella Retirement Fund 2022 1 BPLR 19 (PFA) (endorsing the new position in Fundsatwork v Ngobeni).

Prior to Fundsatwork Fund v Ngobeni, the prevailing legal position was that a fund could withhold pension benefits pending not only criminal but also civil proceedings. 73

73 Momentum 2021 https://eb.momentum.co.za/webDocumentLibrary/LegalUpdates/

2021/Legal_Update_3_of_2021_Withholding_of_a_benefit.pdf 2.

The fifth principle is that the deduction or withholding of pension benefits can be given effect to only by a pension fund in which the employer seeking the deduction is a contributing employer and the employee is a member. 75

75 Absa Bank Ltd v Burmeister 2005 3 All SA 409 (SCA) (holding that a proper interpretation of s 37D(1)(b) is that it was intended to apply to the fund of which the employee was a member during his employment. The court rejected the argument that the wording of s 37D(1)(b) is wide enough to include a subsequent fund of which the ex-employee is a member and to which the pension benefits emanating from the original fund had been paid); and Msunduzi Municipality v Natal Joint Municipal Pension/Provident Fund 2006 3 BPLR 210 (N).

The last and sixth principle is that deductions from pension benefits are permissible only if they relate to financial loss that involves dishonest conduct by the member or employee. 77

77 Chagonda v Transport Sector Retirement Fund 2023 1 BPLR 3 (PFA); Rowan v Standard Bank Staff Retirement Fund 2001 2 BPLR 1643 (PFA) (holding that the employer "must produce proof that an amount was due in respect of compensation owing in respect of damage caused to it by the theft, dishonesty, fraud or misconduct of the complainant and that it was in possession of a written admission of liability in that regard"); Rampone v Blue Ribbon Bakery 2002 12 BPLR 4198 (PFA); Motlokoa v Standard Bank Group Retirement Fund 2020 JOL 52331 (PFA); Hemraj v Columbus Retirement Fund 2022 5 BPLR 93 (PFA); Razlog v PLJ Pension Fund 2003 1 BPLR 4294 (PFA) (explaining that the fund bears the burden of proving that the complainant caused damage, and that such damage resulted from his theft, dishonesty, fraud or misconduct); Maseko v Central Bank of Swaziland (42 of 2012) [2012] SZSC 64 (30 November 2012) (upholding a decision to deduct based on a fund rule as a result of theft, dishonesty, fraud or misconduct); and Swazi MTN Limited v Nxumalo (898 of 2016) [2016] SZHC 114 (15 July 2016).

The element of dishonesty has been found to be an overarching justification that will permit a pension fund to deduct from a member's benefits. In Moodley v Local Transitional Council of Scottburgh Umzinto North 80

80 Moodley v Local Transitional Council of Scottburgh Umzinto North 2000 9 BPLR 945 (D).

The above jurisprudence is relevant and useful for the interpretation of section 33(d) of the PFA 2019. It suggests that the unlawful activity contemplated under section 33(d) may also involve dishonesty or moral turpitude. Otherwise it would defeat the general protection in section 40 of the PFA 2019. The legislature could not have imposed a general rule to protect benefits under section 40 and then provided less stringent criteria to reduce those benefits through deduction under section 33. It could be argued that the legislature in Lesotho was mindful of the statutory wording in section 37D(1)(b)(ii) of the PFA 1956 regarding "any theft, dishonesty, fraud or misconduct by the member", and opted for all-encompassing wording that provides for "loss suffered by the employer due to any unlawful activity of a member" as a ground for a permissible deduction. This is because fraud, theft and dishonesty are all unlawful activities that involve moral turpitude. It is submitted that in Lesotho section 33(d) of the PFA 2019 should be interpreted to give a fund the power to deduct in circumstances that involve moral turpitude or dishonesty such as fraud, theft or embezzlement. Our proposed interpretation means that the legal outcomes in South African cases such as Moodley v Local Transitional Council of Scottburgh Umzinto North will be identical to those in Lesotho. Our interpretation is in keeping with the main goal that drove the enactment of the PFA 2019, as highlighted in the introduction.

6 Conclusion

Pension funds are long-term savings vehicles. They were established with the primary objective of saving for the future and mitigating the risks of old age. To advance this objective the PFA 2019 was enacted to protect the interests of contributors in a pension fund from which they intend to draw money when they reach retirement age. Section 40 is one of several provisions in the PFA 2019 that seek to achieve this objective.

However, not everyone lives or works until they reach retirement age. Some people pass away or change jobs. All these events entitle members to certain benefits. A question always arises as to whether there are any deductions that ought to be made from the benefits before they are paid to the member or their dependants. The PFA 2019 regulates the types of deductions that can be made.

This article has discussed the provisions in the PFA 2019 that regulate pension deductions under section 33. Given that the PFA 2019 is new, the provisions are discussed in this article with reference to the jurisprudence developed in South Africa and Eswatini. The general position in this article is that the jurisprudence from South Africa and Eswatini is relevant and provides lessons on how one might interpret the deduction provisions in Lesotho and deal with various practical challenges.

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Kransdorff v Sentrachem Pension Fund 1999 9 BPLR 55 (PFA)

Lesufi v CSIR Pension Fund 2002 10 BPLR 3927 (PFA)

Letsoalo v Lukhaimane (48743/16) [2017] ZAGPPHC 1246 (13 December 2017)

Makhamo v Corporate Selection Umbrella Retirement Fund No. 2: Participating Employer – Gold Leaf Tobacco Corporation (Pty) Ltd 2020 2 BPLR 422 (PFA)

Malema v Printing Industry Pension Fund (1) 2001 4 BPLR 1867 (PFA)

Manzini v Metro Group Retirement Fund 2001 12 BPLR 2808 (PFA)

Mbatha v Transport Sector Retirement Fund (0016223/19) [2020] ZAGPJHC 18 (19 February 2020)

McNamee v Aeroquip SA (Pty) Ltd 2001 2 BPLR 1618 (PFA)

Mhlaba v Edcon Provident Fund 2020 2 BPLR 448 (PFA)

Moodley v Local Transitional Council of Scottburgh Umzinto North 2000 9 BPLR 945 (D)

Motlokoa v Standard Bank Group Retirement Fund 2020 JOL 52331 (PFA)

Mpuru v Corporate Selection Umbrella Retirement Fund 2022 1 BPLR 19 (PFA)

Msunduzi Municipality v Natal Joint Municipal Pension/Provident Fund 2006 3 BPLR 210 (N)

Ncobela v Edcon Provident Fund 2014 1 BPLR 99 (PFA)

Ndebele v South African National Blood Service Provident Fund 2019 2 BPLR 507 (PFA)

Pillay v RFA Umbrella Provident Fund (PFA) PFA/KN/000026080/2016/UM of 13 December 2016

Power v Old Mutual Superfund Pension Fund 2022 3 BPLR 66 (PFA)

Radebe v Mercedez-Benz South Africa Defined Contribution Provident Fund 2022 1 BPLR 26 (PFA)

Rampone v Blue Ribbon Bakery 2002 12 BPLR 4198 (PFA)

Razlog v PLJ Pension Fund 2003 1 BPLR 4294 (PFA)

Reckitt Benckiser Retirement Fund v BC Gamede Case No PFA 34/2020

Records v Barlows Pension Fund 2000 8 BPLR 920 (PFA)

Rowan v Standard Bank Staff Retirement Fund 2001 2 BPLR 1643 (PFA)

SA Metal Group (Pty) Ltd v Jeftha 2020 1 BPLR 20 (WCC)

Sayed-Essop v The Non-Ferrous Metal Works Pension Fund (2) 2003 7 BPLR 4956 (PFA)

Schoeman v Rentmeester Pensioenfonds 2003 9 BPLR 5145 (PFA)

Scientia Optimate Financial Services (Pty) Ltd v Lukhaimane 2021 JOL 53144 (GP)

Serongwa v Steve Ochse and Partners Provident Fund 2003 6 BPLR 4814 (PFA)

Sitela v MEC for the Provincial Department of Health Eastern Cape Province 2002 6 BPLR 3524 (B)

South African Association of Retired Persons v Transet Ltd 1999 4 All SA 25 (W)

South African Broadcasting Corporation SOC Limited v South African Broadcasting Corporation Pension Fund 2019 4 SA 608 (GJ)

Steenkamp v Consolidated Retirement Fund for Local Government and Another 2018 3 BPLR 770 (PFA)

Tape Aids for the Blind v Palhad (PFA3/2022) [2022] ZAFST 38 (16 May 2022)

Titi v Funds at Work Umbrella Provident Fund (1728/2010) [2011] ZAECMHC 22 (10 March 2011)

Twigg v Orion Money Purchase Pension Fund (1) 2001 12 BPLR 2870 (PFA)

Van Schalkwyk v DSV Flexi Retirement Fund Pension Section 2024 2 BPLR 39 (PFA)

Van Tonder v Motor Industry Provident Fund 2020 2 BPLR 600 (PFA)

Whitelock-Jones v Old Mutual Staff Retirement Fund 2000 6 BPLR 674 (PFA)

Swaziland

Maseko v Central Bank of Swaziland (42 of 2012) [2012] SZSC 64 (30 November 2012)

Standard Bank Limited v Motsa (2401 of 2011) [2012] SZHC 124 (8 June 2012)

Swazi MTN Limited v Nxumalo (898 of 2016) [2016] SZHC 114 (15 July 2016)

Legislation

Botswana

Retirement Funds Act 38 of 2022

Eswatini

Retirement Funds Act 5 of 2005

Lesotho

Income Tax (Superannuation and Assurance) Regulation, 1994

Pension Funds Act 5 of 2019

Pension Funds (Investments) Regulations, 2020

Public Officers' Defined Contribution Pension Fund Act 8 of 2008

South Africa

Criminal Procedure Act 51 of 1977

Financial Sector Regulation Act 9 of 2017

Interpretation Act 19 of 1977

Pension Funds Act 24 of 1956

Promotion of Administrative Justice Act 3 of 2000

Specified Offices Defined Contribution Pension Fund Act 19 of 2011

Government publication

Lesotho

Government Notice 26 of 2019

South Africa

Draft Conduct of Financial Institutions Bill, 2020

Internet sources

Momentum 2021 https://eb.momentum.co.za/webDocumentLibrary/Legal Updates/2021/Legal_Update_3_of_2021_Withholding_of_a_benefit.pdf

Momentum 2021 Legal Update 3/2021: When is It Lawful for a Fund to Withhold a Benefit on Request of an Employer https://eb.momentum.co.za/webDocumentLibrary/LegalUpdates/2021/Legal_Update_3_of_2021_Withholding_of_a_benefit.pdf accessed 14 September 2024

List of Abbreviations