Africa-Press – South-Africa. The Office of the Pension Funds Adjudicator (OPFA) has reported a significant 13% increase in new complaints for the 2024/25 financial year, with the implemented two-pot retirement system cited as a contributing factor.
Two areas of concern have emerged: a widespread non-compliance with Section 13A of the Pension Funds Act wherein employers fail to pay over retirement contributions; and disputes over withdrawal benefits.
Complaints regarding noncompliance constituted 44.34% of all complaints investigated and closed, while complaints concerning withdrawal benefits accounted for 38.79% of all complaints.
Further, the two categories often overlapped, with a complainant discovering that the employer failed to pay contributions only at the stage of withdrawing the benefit.
In a message contained in the annual report, minister of finance Enoch Godongwana said the recurrence of these issues and the high number of complaints remained of great concern, and stakeholders were urged to remedy the undesirable result of poor fund governance, management and administration.
“This, in effect, undermines the government’s efforts as outlined in the three priorities of the GNU to reduce poverty, tackle the high cost of living and build a capable, ethical and developmental state,” he said.
The two-pot system, which came into effect from September 1 last year, enabled members of retirement funds to have access to money from their savings component without leaving their jobs.
Pension funds received a significant number of two-pot withdrawal applications from members. However, there were processing delays, as some funds underestimated the uptake while some could not pay the claims as employers owed arrear contributions. The OPFA confirmed that it received a total of 239 two-pot related complaints from September 2024 to March 2025 (excluding enquiries).
According to OPFA’s 2024/5 annual report, the pensions dispute resolution forum received 10,331 new complaints (9,177 in the previous year) and disposed of 10,100.
Muvhango Lukhaimane, the pension funds adjudicator, said in the annual report that while the implementation of the two-pot system had been successful, a further rise in complaints related to two-pot withdrawals was anticipated in the 2025/26 financial year, prompting the OPFA to prioritise resource allocations and proactive stakeholder engagement.
“Through continuous evaluation, stakeholder feedback and agile adaptation to legislative and industry changes, including the implementation of the two-pot retirement system, the OPFA remains steadfast in its commitment to justice, fairness and quality service for all retirement fund members,” he said.
The Private Security Sector Provident Fund (PSSPF) in particular also added to the surge in new complaints as it does not appear to have a proper monitoring system in place to detect non-payment of contributions by employers and has also consistently failed to act against defaulting employers.
The Financial Services Tribunal (FST) was established as a fee-free regulatory entity for aggrieved people that, among other functions, exists to reconsider the OPFA’s determinations, at little to no cost relative to the expensive and lengthy formal court process. During the period under review, 87 applications for reconsideration were made by people aggrieved by the OPFA decisions. The FST issued 83 decisions and four applications were withdrawn. Of the 83 decisions, 54 were upheld and 27 were remitted for reconsideration.
Meanwhile, the Conduct of Financial Institutions (COFI) Bill is expected to significantly change the legislative environment of financial regulatory tribunals. COFI is part of the broader Twin Peaks regulatory reform that aims to create a single, unified and consistent legal framework for the market conduct of financial institutions.
Nondumiso Ntshangase, senior legal adviser at OPFA, said the impending COFI Bill may affect the mandate of OPFA by expanding the definition of “complaint” to also introduce “advice”.
According to the deputy pension funds adjudicator, Naheem Essop, the expansion of the definition of a “complaint” to include not just disputes or grievances, but also issues arising from financial “advice”, could empower the OPFA to investigate and adjudicate cases where poor or misleading advice has led to adverse outcomes for pension fund members, an area that previously may have fallen outside its jurisdiction.
Ntshangase said the COFI Bill also proposes the definition of “complaint” to include a requirement to accept oral complaints. She said this might create uncertainty as complaints might not be captured correctly, leading to potential delays in finalising them. There will also be financial implications, as oral complaints will require independent transcription to ensure accuracy.
Ntshangase said the COFI Bill will further expand the definition of “retirement fund” to include public sector retirement funds, thereby expanding the OPFA’s jurisdiction to address public sector fund complaints.
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