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In this circular, NAMFISA restates the provisions of the Pension Funds Act relating to deductions from benefits as envisaged by Sections 37D(b)(ii)(aa; bb). So far, so good; no one will take exception to that. It proceeds by interpreting the PFA to mean that a fund may not deduct from a benefit for housing loan debt or a guarantee by the employer unless the fund rules explicitly allow this. Unfortunately, NAMFISA does not indicate on what legal precedent its interpretation relies. It is worth pointing out to funds or employers that we have seen a seasoned legal opinion that NAMFISA’s interpretation is incorrect.

Challenging NAMFISA’s interpretation will be costly and take long to conclude. For these reasons, it is unlikely that anyone will go this route, and NAMFISA knows this!

NAMFISA also does not say on what legal precedent it relies on scorning the practice of affording an employer reasonable time for obtaining a judgment against an employee for fraud, theft, dishonesty, or misconduct. In a recent case in South Africa reported below in “The new pension case South African workers and businesses should know about” the court found that the delay was caused by various factors and could not be solely attributed to the conduct (or lack thereof) by the employer. It means that an employer must have a fair chance to institute legal action against an employee, and not doing so would render Section 37D(b)(ii)(bb) futile.

 

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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