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

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.

Keywords: Occupational retirement funds; pension fund rules; retirement benefits; retirement fund disputes; Pension Funds Act.