Please quote our reference: PFA/FS/ /2015/YVT REGISTERED POST. Dear Sir,

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1 4 th Floor Riverwalk Office Park Block A, 41 Matroosberg Road Ashlea Gardens, Extension 6 PRETORIA SOUTH AFRICA 0181 P.O. Box 580, MENLYN, 0063 Tel: , Fax: enquiries@pfa.org.za Website: Please quote our reference: PFA/FS/ /2015/YVT REGISTERED POST Dear Sir, DETERMINATION IN TERMS OF SECTION 30M OF THE PENSION FUNDS ACT, 24 OF 1956 ( the Act ): RM MOHOROSI ( complainant ) v THE PRIVATE SECURITY SECTOR PROVIDENT FUND ( first respondent ) AND MANANYANI MAINTENANCE SERVICES CC ( second respondent ) [1] INTRODUCTION 1.1 This complaint concerns the failure by the second respondent to pay all provident fund contributions to the first respondent on behalf of the complainant which affected his fund credit. The complaint also concerns the first respondent s failure to provide the complainant with a benefit statement. 1.2 The complaint was received by this Tribunal on 13 January On 16 January 2015, a letter acknowledging receipt of the complaint was sent to the complainant. On the same date, copies of the complaint were forwarded to the respondents requesting them to file their responses by 15 February On 17 February 2015, follow-up The Office of the Pension Funds Adjudicator was established in terms of Section 30B of the Pension Funds Act, 24 of The service offered by the Pension Funds Adjudicator is free to members of the public. Centralised Complaints Helpline for All Financial Ombud Schemes 0860 OMBUDS ( )

2 2 letters were forwarded to the respondents requesting them to file their responses by 9 March A response was received from the first respondent on 18 March The complainant made further submissions on 26 May No response was received from the second respondent and no further submissions were received from the parties. 1.3 Having considered the written submissions before this Tribunal, it is considered unnecessary to hold a hearing in this matter. The determination and reasons therefor appear below. [2] FACTUAL BACKGROUND 2.1 The complainant has been in the employ of the second respondent from 1 July 2010 to date. By virtue of his employment in the private security industry, the complainant is a member of the first respondent. 2.2 The first respondent is administered by Absa Consultants and Actuaries (Pty) Ltd ( administrator ). [3] COMPLAINT 3.1 The complainant is dissatisfied with the fact that the second respondent deducts provident fund contributions from his salary without remitting same to the first respondent. He submitted that he contacted the administrator and was advised that the second respondent is not up to date with provident fund contribution payments. In support thereof, he attached a copy of his payslip for the period 16 November 2014 to 15 December 2014 as proof that a deduction in the amount R was made from his salary. 3.2 The complainant submitted that the employees have called upon the directors of the second respondent on numerous occasions regarding

3 3 the matter. However, they failed to come. Further, they also failed to provide them with benefit statements on an annual basis. 3.3 The complainant requests this Tribunal to order the second respondent to pay all provident fund contributions to the first respondent on his behalf and for the first respondent to provide him with a benefit statement. Further submissions 3.4 On 26 May 2015, the complainant submitted that he was previously employed in the private security sector with Fidelity Security, which employment terminated in June [4] RESPONSES First respondent 4.1 The first respondent submitted that the complainant became its member in August It stated that the second respondent became its participating employer in February 2007 and is non-compliant in terms of section 13A of the Act. It stated that fund contributions were received up to December 2014 and allocated up to March It submits that the complainant has a fund credit of R representing contributions received on his behalf for the period August 2010 to November 2010 and January 2011 to March It further submitted that the administrator informed it that the complainant will be unable to claim his withdrawal benefit as he is currently still a member of the first respondent and in terms of Rule 3.2.2, a member shall not be permitted to withdraw from membership while he remains in employment.

4 4 4.3 It submits that the complainant appears in contribution schedules received from the second respondent for the period April 2011 to December It mentioned that although the second respondent provided contribution schedules, it only provided corresponding contribution payments for the period April 2011 to August 2011, November 2011 to December 2011, October 2012 to November 2012, January 2013, August 2014 and October 2014 to December 2014 and failed to provide corresponding contribution payments for the period September 2011 to October 2011, January 2012 to September 2012, December 2012, February 2013 to July 2014 and September It mentioned that due to the second respondent s non-compliance, the complainant does not have any contributions allocated to him and a fund credit cannot be transmitted from the administrator s system. 4.4 It stated that if the complainant was indeed employed as alleged, then the second respondent defaulted in respect of contributions required to have been paid on his behalf for the period December 2010, September 2011 to October 2011, January 2012 to September 2012, December 2012, February 2013 to July 2014, September 2014 and January 2015 to date. Such default is in contravention of Rules and of its Rules as well as section 13A of the Act. 4.5 The first respondent concludes that in terms of Rule 4.3.2(b) of its rules, it cannot pay the complainant any benefit that would have been secured by contributions that were not paid to it by the second respondent. Second respondent 4.6 The second respondent was afforded an opportunity to comment on the allegations made against it as required in terms of section 30F of the

5 5 Act. It failed or neglected to respond. In the circumstances, this Tribunal will dispose of the matter on the basis of the available facts. [5] DETERMINATION AND REASONS THEREFOR Introduction 5.1 The issues which fall for determination by this Tribunal are firstly, whether or not the second respondent should be held accountable for failing to pay contributions on behalf of the complainant which affected his fund credit and secondly, whether or not the first respondent should be liable for failing to provide the complainant with a benefit statement. 5.2 The rules of a fund are supreme and binding on its officials, members, shareholders and beneficiaries and anyone so claiming from the fund (See Section 13 of the Act and Tek Corporation Provident Fund & Others v Lorentz [2000] 3 BPLR 227 (SCA) at paragraph [28]). 5.3 Rules 3.1 and 3.2 of the first respondent s rules dealing with membership of a fund provide as follows:- 3.1 EMPLOYER Participation Subject to RULE below, all EMPLOYERS in the PRIVATE SECURITY SECTOR shall participate in the FUND with effect from the commencement of the FUND or the commencement of the EMPLOYER S business in the PRIVATE SECURITY SECTOR, whichever is the later. In turn, rule 3.2 stipulates that:- 3.2 MEMBER Participation

6 Subject to RULE below, each ELIGIBLE EMPLOYEE shall, as a condition of employment, become a MEMBER of the FUND with effect from the commencement of the FUND or commencement of the EMPLOYER S business in the PRIVATE SECURITY SECTOR, whichever is the later. 5.4 According to the information obtained from the Companies and Intellectual Property Commission ( CIPC ) website on 26 May 2015, the second respondent commenced its business on 24 May 2006 and is still in business. The second respondent became a participating employer in the first respondent in February The first respondent commenced on 1 September The second respondent ought to have registered as a participating employer in the first respondent on 24 May 2006 when it commenced business. Therefore, the second respondent failed to comply with the provisions of Rule of the first respondent s Rules. 5.5 Rule of the first respondent provides as follows: A MEMBER entering the PRIVATE SECURITY SECTOR for the first time or who has been out of the PRIVATE SECURITY SECTOR for more than 6(six) months shall, for the first 4 (four) months of MEMBERSHIP, only be entitled to the RISK BENEFITS. Rule goes on to provide as follows: After the MEMBER has been in the FUND for 4 (Four) months the other benefits of the FUND become payable and the contributions as per RULES and become payable in respect of that MEMBER. 5.6 On 26 May 2015, the complainant advised this Tribunal telephonically that he was previously employed in the private security sector by Fidelity Security until June 2010, immediately before his employment with the second respondent commenced in July Thus, the complainant is not a first time employee in the private security industry

7 7 and neither was he out of the private security sector for more than six months before his employment with the second respondent commenced. Therefore, Rules and do not apply to him. The second respondent ought to have commenced deducting provident fund contributions from his salary from 1 July 2010, the date of commencement of his employment. He was only registered as a member of the first respondent in August 2010, therefore, was not timeously registered as a member of the first respondent. 5.7 Rule 4.1 of the first respondent s rules deals with the payment of contributions and provides as follows: 4 CONTRIBUTIONS 4.1 Contributions Contributions by the MEMBER (a) With effect from 1 September 2009, each MEMBER shall make a monthly contributions to the FUND at the rate of 6,5% (six comma five per cent) of his or her FUND SALARY towards his or her retirement benefit; provided that in respect of a MEMBER whose EMPLOYER S monthly pay cycle ends during the month of September 2009, such MEMBER shall commence to contribute to the FUND at the rate of 6,5% (six comma five per cent) of his or her FUND SALARY with effect from 1 October (b) The monthly contributions shall rise to 7% (seven per cent) with effect from 1 September 2010 and shall rise further to 7,5% (seven comma five) per cent with effect from 1 September 2011; provided that where the monthly pay cycle ends during the month of September the higher rate shall apply with effect from 1 October of the applicable year. (c) The contributions by each MEMBER must be credited to his or her MEMBER SHARE ACCOUNT.

8 Contributions by the EMPLOYER (a) With effect from 1 September 2009, the EMPLOYER shall make a monthly contribution towards the retirement benefit funding of each MEMBER in its SERVICE at the rate of 6,5% (six comma five per cent) of the MEMBER S FUND SALARY; provided that an EMPLOYER whose monthly pay cycle ends during the month of September shall commence to contribute at the rate of 6,5% (six comma five per cent) of the MEMBER S FUND SALARY with effect from 1 October (b) The monthly contribution shall rise to 7% (seven per cent) with effect from 1 September 2010 and shall rise further to 7,5 (seven comma five per cent) with effect from 1 September 2011; provided that where the monthly pay cycle ends during the month of September the higher rate shall apply with effect from 1 October of the applicable year. (c) The contribution in RULE 4.1.2(a) shall include the premiums for the FUNERAL BENEFIT and any insured partial DISABILITY BENEFIT which premiums, together with so much as the TRUSTEES decide from time to time is required to meet the expenses of the FUND in terms of RULE , must be credited to the EXPENSE RESERVE ACCOUNT. In so deciding the TRUSTEES must take into account the amounts credited to the EXPENSE RESERVE ACCOUNT in terms of RULE (a). The TRUSTEES must also, on the advice of the ACTUARY, determine from time to time the proportion of the contributions in RULE 4.1.2(a) and (b) to be credited to the SELF INSURANCE RESERVE ACCOUNT in order to fund adequately the RISK BENEFITS. 5.8 The second respondent has a duty placed on it by the provisions of section 13A(1)(a) of the Act and the rules of the first respondent to pay contributions and submit schedules to the first respondent indicating on whose behalf payment is being made, and the first respondent in turn has a duty to pay out benefits to the members. Section 13A(3)(a)(i)

9 9 states that such contributions must be paid directly into the fund s account and section 13A(3)(a)(ii) states that the contributions must be paid directly to the fund in such a manner as to have the fund receive the contributions no later than seven days after the end of that month for which contributions are payable. 5.9 The first respondent submits that the complainant has a fund credit in the amount of R for contributions received for the period August 2010 to November 2010 and January 2011 to March The first respondent further submits that the complainant appears in contribution schedules received from the second respondent for the period April 2011 to December It mentioned that although the second respondent provided contribution schedules, it only provided corresponding contribution payments for the period April 2011 to August 2011, November 2011 to December 2011, October 2012 to November 2012, January 2013, August 2014 and October 2014 to December 2014 and failed to provide corresponding contribution payments for the period September 2011 to October 2011, January 2012 to September 2012, December 2012, February 2013 to July 2014 and September It mentioned that due to the second respondent s non-compliance, the complainant does not have any contributions allocated to him and a fund credit cannot be transmitted from the administrator s system The first respondent stated that fund contributions were received up to December 2014 and allocated up to March The first respondent must allocate all contributions received from the second respondent up to December 2014 in order to determine any missing contributions. On the evidence submitted, this Tribunal finds that although deductions were effected from the complainant s salary, the second respondent owes contributions on behalf of the complainant for the period July 2010, December 2010, September 2011 to October 2011 January 2012 to September 2012, December 2012, February 2013 to July 2014,

10 10 September 2014 and January 2015 to date. Such default is in breach of Rules and of the first respondent s Rules as well as section 13A of the Act The complainant submitted that he is still employed by the second respondent. Rule of the first respondent dealing with member participation provides as follows: A MEMBER shall not be permitted to withdraw from membership while he remains in SERVICE. In turn, the first respondent s rules define service as follows: SERVICE shall mean employment with any of the EMPLOYER S within the PRIVATE SECURITY SECTOR The complainant is still in the employment of the second respondent and is therefore not entitled to receive a withdrawal benefit. Therefore, the appropriate relief is that which has the effect of placing the complainant in the position he would have occupied had the second respondent registered him timeously as a member of the first respondent and paid all the contributions due (see Orion Money Purchase Pension Fund (SA) v Pension Funds Adjudicator and Others [2002] 9 BPLR 3880 (C) at 3839F-G and Mabale v Freedmix Provident Fund and Others [2008] 1 BPLR 29 at 37E-F. Benefit statement 5.13 The complainant s entitlement to be provided with adequate information regarding his benefit statement is based essentially on the duties of the board in terms of section 7D(c) of the Act, which reads as follows:

11 11 The duties of the board shall be to- (c) ensure that adequate and appropriate information is communicated to members and beneficiaries of the fund informing them of their rights, benefits and duties in terms of the rules of the fund, subject to such disclosure requirements as may be prescribed Funds account to their members by inter alia furnishing them with benefit statements on a regular basis in order to give them information regarding their benefits, contributions and other relevant information. Therefore, a benefit statement plays a very important role in the sense that it gives members vital information regarding their benefits in the event of death, withdrawal, disability, retirement and other relevant information relating to the fund s assets The frequency of providing such benefit statements is normally set out in the fund s rules. Most funds make provision in their rules that benefit statements should be issued to members annually. However, in the event that there is no clear provision in the fund s rules in this regard, the provisions of Circular Pension Fund (Circular PF) No.86 read together with Circular PF No. 90 of the Financial Services Board (FSB) are instructive. Circular PF No. 86 requires that an annual benefit statement must be furnished to each member (excluding pensioners and deferred pensioners) not later than six months after the financial year end of that fund In providing benefit statements to members on a regular basis, the board of a fund will also be complying with its fiduciary duties to members. This includes a duty to act in the best interest of members at all times, especially in matters relating to their benefits (see Section 7C(2)(a) of the Act). The duty to disclose relevant information to members is also important for the purposes of accountability and provision of access to information (see section 32(1)(b) of the

12 12 Constitution of the Republic of South Africa Act, of 1996 and Wentworth v GG Umbrella Fund and Others [2009] 1 BPLR 87 (PFA)). The appropriate remedy is to order the first respondent to provide the complainant with his latest benefit statement. [6] ORDER 6.1 In the instance, the order of this Tribunal is as follows: The second respondent is ordered to register as a participating employer with the first respondent from 24 May 2006, within two weeks of this determination; The first respondent is ordered to register the complainant as a member of the first respondent from 1 July 2010; within two weeks from the date of this determination; The first respondent is ordered to allocate all contributions received from the second respondent for the period April 2011 to December 2014, within three weeks of this determination; The second respondent is ordered to submit all outstanding contribution schedules in respect of the period July 2010, December 2010, September 2011 to October 2011 January 2012 to September 2012, December 2012, February 2013 to July 2014, September 2014 and January 2015 to date to the first respondent, within two weeks of this determination; Should the second respondent fail to comply with either paragraph 6.1.4, the first respondent is ordered to reconstruct the complainant s contribution schedules based on the information already in its possession, within two weeks of the second respondent s failure to submit the schedules;

13 The first respondent is ordered to compute the complainant s outstanding contributions plus late payment interest owed by the second respondent in terms of section 13A(7) of the Act, within one week of receiving the contribution schedules in terms of either paragraphs or (whichever is applicable); The first respondent is ordered to transmit to the second respondent its computations in paragraph 6.1.6, within three days of completing them; The second respondent is ordered to pay the first respondent the complainant s outstanding contributions plus late payment interest as computed in paragraph 6.1.6, within two weeks of receiving the computations from the first respondent; and The first respondent is ordered to provide the complainant with the breakdown of his contributions and his latest benefit statement within ten weeks of this determination and one annually thereafter for as long as his membership subsists. DATED AT PRETORIA ON THIS 05 TH DAY OF JUNE 2015

14 14 MA LUKHAIMANE PENSION FUNDS ADJUDICATOR Section 30M Filing: High Court Parties unrepresented