Discrimination against pensioners and the withholding of pension benefits because of money owed to the employer are two of the issues that were raised before Pension Funds Adjudicator, Professor John Murphy recently. Charlene Clayton reports.
CASE 1
Taking legal action closes the avenue to Murphy
If you are in dispute with your employer or retirement fund and you decide to take legal action, remember that the Pension Funds Adjudicator will not be able to investigate your complaint.
In a recent case, Mike Stow, employed as a director of administration at First Bowring Insurance Brokers until March this year, complained to Pension Funds Adjudicator Professor John Murphy that First Bowring was withholding his pension benefit of about R80 000 unless he signed over R30 000 of the money to the company.
The principal officer of the First Bowring Staff Pension Fund told Murphy that Stow owed the company one month's salary because he had not given notice and that he also owed R30 000 for a loan.
Murphy says the primary issue in this complaint is whether the Pension Funds Act protects you from attempts by your employer to take money from your benefits to repay loans granted by your employer.
"A proper reading and application of these provisions might lead to the finding that the First Bowring Staff Pension Fund acted unlawfully," says Murphy.
But before lodging his complaint with the adjudicator's office, Stow had taken the issue to the High Court.
As a result, Murphy was forced to dismiss the complaint because he is not allowed to investigate a complaint where legal proceedings have been instituted in a civil court.
CASE 2
Pension fund members not all treated the same
Your retirement fund does not have to treat all members identically, says Pension Funds Adjudicator Professor John Murphy.
The duty of trustees to act impartially towards different beneficiaries of a fund does not mean that all beneficiaries must receive equal benefits, nor that all beneficiaries must receive some benefit, he says.
Trustees are entitled to exclude some beneficiaries from particular benefits and to prefer others but they have to keep in mind the Constitution which prohibits unfair discrimination.
A complaint that a fund's trustees did not do their duty or acted in a discriminatory manner must show that the treatment was unfair and was not justifiable on reasonable grounds.
A retired member of the BP Southern Africa Pension Fund, Cecil Low, complained to Murphy that his fund increased benefits only to the active members. He asked Murphy to make an order extending the benefit granted to active members to pensioners and beneficiaries too.
Murphy dismissed his request saying that the objective of the fund in changing the rule was legitimate. The employer wanted to grant better benefits to be more competitive in the workplace.
Murphy says the employer is also a participant in the fund and the trustees are duty bound to consider its interests.
Also, the adjustment in favour of active members was between two percent and seven percent and could "hardly be considered disproportionate" or "unduly onerous".
In his assessment Murphy pointed out that "there can be little argument ... that unfairly discriminatory decisions and rules will be an improper exercise of power, maladministration or illegal ... However, it does not follow that every decision or rule that differentiates amounts to discrimination."
"Firstly, the differentiation must amount to discrimination. Secondly, such discrimination must be unfair. Thirdly, there should be no justification for the unfair discrimination," he says.