The Financial Services Tribunal (FST) has confirmed that the Pension Funds Adjudicator does not have the jurisdiction to investigate complaints that arise from employer-held, unapproved disability policies, even where those policies are associated with membership of a registered fund.
The applicant, Andrew William Peters became a member of the Sanlam Umbrella Provident Fund in August 2018 when he commenced employment with Cut-N-Weld Suppliers (Pty) Ltd (CNW).
In August last year, Peters lodged a complaint with the Pension Funds Adjudicator alleging that CNW had understated his annual salary for purposes of calculating risk premiums, which, he said, produced a reduced disability benefit.
The Fund confirmed that CNW had paid arrear contributions for the period September 2023 to January 2024 after Peters’ salary increase, and those amounts were allocated to his membership record and paid over to Sanlam Group Risk after the deduction of the premiums.
The Fund later advised it was paying the correct benefit based on information and contributions provided by CNW. It said CNW’s underpayment of unapproved disability benefit contributions constituted a labour dispute between the company and Peters.
In January this year, the Adjudicator determined that the complaint concerned an unapproved risk benefit and did not relate to the administration or rules of a retirement fund as envisaged in the Pension Funds Act (PFA). The Adjudicator therefore held that it lacked jurisdiction to investigate the matter.
Peters lodged a reconsideration application in February.
Jurisdictional limits under the PFA
In its decision, the Tribunal observed that the Pension Funds Adjudicator is a statutory body whose authority and powers are derived solely from the PFA, and therefore it may adjudicate only those complaints that fall within the scope of the Act and its jurisdiction.
Section 1 of the PFA clarifies that a “complaint” refers only to matters relating to the administration of a fund, its investments, or the application of its rules.
The Tribunal emphasised the distinction between benefits administered by the Fund and benefits provided solely through an employer or insurer: only disputes concerning benefits administered by the Fund fall within the statutory definition of a “complaint” and thus within the Adjudicator’s jurisdiction.
The Fund’s rules distinguish between:
- an unapproved disability benefit provided under an employer-held policy issued by an insurer (premiums paid by the employer); and
- an approved disability benefit effected and administered by the Fund on behalf of members.
The Tribunal emphasised that the PFA has jurisdiction only over disputes administered by the Fund on behalf of members.
The Tribunal found that Peters’ unapproved disability benefits were held and funded by CNW and not administered by the Fund. On that basis, the FST upheld the Adjudicator’s determination that the complaint concerned an unapproved risk benefit outside the PFA’s remit.
The decision referred to prior authority in which the Adjudicator treated employer/insurer-only benefits as outside its jurisdiction. The Tribunal recorded the Adjudicator’s directions that disputes of this nature fall under the Long-term Insurance Act and should be pursued through the National Financial Ombud Scheme (NFO).
At the hearing, Peters confirmed the complaint had been incorrectly lodged with the Adjudicator and acknowledged he had since followed the Adjudicator’s advice and submitted a complaint to NFO.
Procedural scope of reconsideration
The Tribunal further explained that the reconsideration jurisdiction is limited to matters that were presented to and determined by the Adjudicator.
Peters attempted, in his reconsideration application, to introduce a new complaint concerning the alleged underpayment of provident fund contributions by CNW. The Tribunal noted that this issue did not form part of the Adjudicator’s determination, and the Tribunal may not adjudicate issues that were neither presented to nor considered by the Adjudicator. Accordingly, it dismissed the application for reconsideration.
