The media regularly reports on the large amounts of money NAMFISA boasts to have extracted from pension funds and paid to members. The latest quarterly report mentioned a figure of around N$ 6 million. We understand that NAMFISA desires to justify its role in protecting benefits. However, without context, these reports can easily be misinterpreted and harm the image of pension funds and their administrators amongst members and the general public.

NAMFISA does not pay benefits to fund members. NAMFISA sometimes intervenes in a member’s complaint about non- or late payment of his benefit. There are many reasons for non, or late payment of a benefit. Reasons could those envisaged in the Pension Funds Act or procedural. Mostly, the members’ tax affairs are not up-to-date because of their own doing. If they are not up-to-date, NamRA will not issue a tax directive, and the fund (the administrator on the fund’s behalf) cannot pay the benefit. Often, an outstanding form prevents a fund from paying a benefit. The fund (and its administrator) cannot be held accountable for outstanding forms. Forms are outstanding because the employer is missing certain information from the member or his signature, there is a dispute between the employer and the member, or the employer lays claim against the benefit under the PFA.

There are a few legal reasons for late payment or non-payment of a benefit by a fund. These reasons are set out in Section 37D and relate to legal claims against the member’s benefit from a bank or the employer. A bank could claim an outstanding housing loan guaranteed by the fund. An employer could claim a housing loan guarantee or for loss suffered by the employee’s fraud, theft, dishonesty or misconduct. If an employer has incurred a loss for the described reasons, an investigation into the matter could take time, causing a delay in the payment. It could also result in the benefit being reduced or attached by the fund for the employer’s benefit.

In the case of a death claim, the fund’s trustees are responsible for allocating the benefit to the deceased’s dependents and nominees and are legally liable for a defective allocation. The PFA generally affords trustees twelve months to absolve themselves of their onerous responsibility. Very often, the deceased’s family members object to a trustee decision. Such an objection could easily delay payment beyond the allowed twelve months.

The fact that funds eventually paid out around N$ 6 million over the quarter following NAMFISA’s enquiry does not mean that they would not have paid otherwise. Lastly, the N$ 6 million paid after NAMFISA’s enquiry represents a minute 0.2% of total benefit payments of around N$ 3 billion made by the industry quarterly.

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. RFS (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of RFS.

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