The Rules of an Occupational Retirement Fund and the Problem of Defaulting Employers: A Reconsideration of Orion Money Purchase Pension Fund (SA) v Pension Funds Adjudicator

Authors

  • Thulani Nkosi University of the Witwatersrand

DOI:

https://doi.org/10.17159/1727-3781/2016/v19i0a1663

Keywords:

Occupational retirement funds, pension fund rules, retirement benefits, retirement fund disputes, Pension Funds Act

Abstract

This paper reflects on the ongoing challenges presented by certain employers who, whilst deducting occupational retirement fund contributions from their employees' salaries, fail to pay over those contributions to the relevant occupational retirement funds. These employers also often fail to register themselves or their employees as participating members of occupational retirement funds when they are supposed to. Such failures to register with the relevant occupational retirement funds and to pay over fund contributions have disastrous effects on the employees who are at the receiving end of these unlawful practices. This is the case because employees lose the value and use of their salaries through the deductions, and also the benefits of their occupational retirement funds.

Although the Pension Funds Act 24 of 1956 is sufficiently responsive and provides adequate mechanisms to guide against this scourge, it is this paper's argument that occupational retirement funds themselves have not done their bit in enforcing the Pension Funds Act. The failure on the part of the funds to enforce the Pension Funds Act by ensuring that fund contributions are collected from participating employers has resulted in, and continues to result in, untold losses on the part of the employees. Properly considered, the paper submits that the failure by occupational retirement funds to enforce the Pension Funds Act has the potential of unjustifiably limiting several of the employee members' constitutional rights.

It is not good enough, so argues the paper, for occupational retirement funds to have rules that prohibit them from paying retirement fund benefits where no contributions have been received. It is also not good enough for courts and the office of the PFA to blindly enforce the rules of occupational retirement funds without consistently subjecting them to the Pension Funds Act and the Constitution for validity and legality. It is on this basis that the case of Orion Money Purchase Pension Fund (SA) v Pension Funds Adjudicator is challenged. The case is authority for the principle that the only available remedy to an employee who has been cheated out of retirement fund benefits owing to the employer's failure to make fund contributions is one that compels the fund to calculate those outstanding contributions and demand that total sum from the employer. For various reasons this does not address the problem of defaulting employers, which can be addressed only by properly enforcing the Pension Funds Act and also consistently subjecting the rules to the Act in cases of disputes.

 

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References

Literature

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Case law

Abrahamse v Connock's Pension Fund 1963 2 SA 76 (WLD)

ABSA Bank Ltd v SACCAWU National Provident Fund (Under Curatorship) 2012 3 SA 585 (SCA)

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City of Johannesburg v South African Local Authorities Pension Fund 2015 ZASCA 4 (9 March 2015)

Ekurhuleni Municipality v Germiston Municipal Retirement Fund 2010 2 SA 598 (SCA)

Emma v Orion Money Purchase Provident Fund (SA) (1) 2004 2 BPLR 5443 (PFA)

Erasmus v Corporate Selection Retirement Fund PFA/NW/6968/06/VIA

Gafane v Orion Money Purchase Pension Fund (SA) 2001 6 BPLR 2074 (PFA)

Gerson v Mondi Pension Fund 2013 6 SA 162 (GSJ)

Hospitality Industry Provident Fund v Southern Sun Hotel Interest (Pty) Ltd 2000 8 BPLR 889 (PFA)

Khanye v The Private Sector Security Provident Fund PFA/GP/00003523/2013/MR

Law Society of South African v Minister for Transport 2011 1 SA 400 (CC)

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Malatji v Gauteng Building Provident Fund PFA/NP/9447/2011/LMP

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Mnguni v Abbot Laboratories SA (Pty) Ltd Pension Fund PFA/GA/5827/05/VIA

Mostert v Old Mutual Life Assurance Co (SA) Ltd 2001 4 SA 159 (SCA)

Natal Joint Municipality Pension Fund v Endumeni Municipality 2012 4 SA 593 (SCA)

Orion Money Purchase Pension Fund (SA) v Pension Funds Adjudicator 2002 JOL 10037 (C)

Private Sector Security Provident Fund v Naphtronics (Pty) Ltd 2008 29 ILJ 289 (B)

Randburg Town Council v Kerksay Investments (Pty) Ltd 1998 1 SA 98 (SCA)

Resa Pension Fund v Pension Funds Adjudicator 2000 3 SA 313 (C)

Sekele v Orion Money Purchase Pension Fund 2001 4 BPLR 1906 (PFA)

Sentra-Oes Kooperatief Bpk v Commissioner for Inland Revenue 1995 3 SA 197 (A)

South African Local Authorities Pension Fund v Lukhanji Municipality, South African Local Authorities Pension Fund v Tsolwana Municipality 2011 ZAECGHC 54 (18 October 2011)

Tek Corporation Provident Fund v Lorentz 1999 4 SA 884 (SCA)

The Council for Medical Schemes v Genesis Medical Scheme 2016 1 SA 429 (SCA)

Younghusband v Decca Contractors (SA) Pension Fund and its Trustees 1999 20 ILJ 1640 (PFA)

Van der Burgh v Eskom Pension and Provident Fund PFA/GA/7389/06/VIA

Welch v Golden Pension Fund 2002 1 BPLR 3007 (PFA)

Register of legislation

Constitution of the Republic of South Africa, 1996

Financial Services Laws General Amendment Act 45 of 2013

Income Tax Act 58 of 1962

Medical Schemes Act 131 of 1998

Pension Funds Act 24 of 1956

Published

2017-05-17

How to Cite

Nkosi, T. (2017). The Rules of an Occupational Retirement Fund and the Problem of Defaulting Employers: A Reconsideration of Orion Money Purchase Pension Fund (SA) v Pension Funds Adjudicator. Potchefstroom Electronic Law Journal, 19, 1–25. https://doi.org/10.17159/1727-3781/2016/v19i0a1663

Issue

Section

Case Notes