Pension law clarified: Tribunal underscores limits of adjudicators in new ruling

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The ruling confirms that the Pension Funds Adjudicator (PFA) has no authority to investigate complaints arising from employer-held, unapproved disability policies, even when such benefits are linked to a registered fund.

Background

An employee of a participating employer under an umbrella provident fund lodged a complaint with the PFA after receiving a reduced disability benefit. The complainant alleged that the employer had understated their annual salary, resulting in lower premiums and, consequently, a reduced payout under the disability policy.

The PFA declined to investigate the matter, finding that the complaint related to an unapproved disability benefit underwritten by an insurer — a benefit not administered in terms of the fund’s rules. Dissatisfied with this outcome, the complainant sought reconsideration before the Financial Services Tribunal under the Financial Sector Regulation Act.

Central issue: Jurisdiction

At the heart of the matter was whether the PFA had jurisdiction to investigate complaints about unapproved benefits — that is, benefits provided through an employer’s insurance arrangement rather than those administered by a pension fund.

The Tribunal examined section 1 of the Pension Funds Act 24 of 1956, which defines a “complaint” as one relating to the administration of a fund, its investments, or the application of its rules. Benefits that fall outside a fund’s administration are, by definition, beyond the PFA’s statutory scope.

The Tribunal confirmed that the disability policy in question was an employer-held, unapproved policy — distinct from the approved benefits managed by the fund itself. The fund’s rules explicitly differentiate between:

• Unapproved disability benefits: Provided through employer insurance, with premiums paid by the employer; and
• Approved disability benefits: Administered directly by the fund for members.

As such, the complaint properly fell within the jurisdiction of the National Financial Ombud Scheme (NFOSA), which addresses disputes relating to long-term insurance policies.

Tribunal cannot entertain new issues

The Tribunal also rejected the applicant’s attempt to introduce a new ground — an alleged underpayment of provident fund contributions by the employer— which had not formed part of the original PFA complaint.

The Tribunal made clear that its reconsideration powers are confined to reviewing the decision actually made by the PFA. It cannot adjudicate matters not previously before the adjudicator or arising after the fact.

Only once the PFA issues a fresh determination on the contribution dispute, the Tribunal noted, could the Applicant seek reconsideration of that decision.

The Tribunal affirmed the PFA’s position, finding:

1. The PFA correctly declined jurisdiction over the unapproved disability claim;
2. The Tribunal itself could not expand its jurisdiction to consider new issues — such as the alleged underpayment of provident fund contributions — that were not part of the PFA’s original decision; and
3. There were no exceptional circumstances to justify a costs order.

Accordingly, the application for reconsideration was dismissed.

Key takeaways for employers and fund members

1. Know the nature of the benefit: Whether a benefit is approved (fund-administered) or unapproved (employer-held) determines the appropriate regulatory route.
2. Jurisdiction is statutory, not discretionary: The PFA’s powers are confined strictly to complaints about fund administration and rules — not employer insurance arrangements.
3. Procedural accuracy matters: Misfiling a complaint can delay resolution and increase costs. Employees must identify the correct forum — the PFA, NFOSA, or another regulator — at the outset.
4. Employers must communicate clearly: Employers participating in umbrella funds should clearly distinguish between approved and unapproved benefits in staff communications and payslips to avoid misunderstandings.

Conclusion

This decision reinforces a critical regulatory principle: jurisdiction cannot be created by sympathy or circumstance. The PFA’s authority begins and ends with the Pension Funds Act. For unapproved benefits, the path lies with NFOSA or other insurance forums — not the PFA.

This ruling serves as a reminder that where a complaint is lodged can be just as important as what it is about.