Estate Agency Affairs Board’s CEO went ‘rogue’ regarding pensions, adjudicator finds

The annual report of the Pension Funds Adjudicator that was released this week has revealed that the suspended head of the Estate Agency Affairs Board (now called the Property Practitioners’ Council), failed to deduct and remit pension contributions from some of her staff.

In its summary of important determinations, the annual report tells the tale of “a bizarre complaint” lodged with the adjudicator by the board of directors to complain about the conduct of its own CEO, Mamodupi Mohlala-Mulaudzi, who failed to deduct and remit pension contributions to the Estate Agency Affairs Board Pension and Life Assurance Scheme for certain affected employees.

Criminal complaint recommended

Mohlala-Mulaudzi was the Pension Funds Adjudicator from 2007 to 2010.

According to the annual report, she instructed the human resources department not to make deductions for five of its employees, although the rules of the fund provide that every permanent employee must be registered as a member of the fund.

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“This was done apparently to afford the affected employees an opportunity to consider their financial position and whether they could afford the deductions. The CEO’s instructions to the HR department were in direct conflict with instructions given to her by the board of directors and it is not clear whether disciplinary action ensued.”

However, the report states, there was an exchange of legal opinions and legal memoranda expressing different views on the issue.

“Obviously concerned about the implications of such conduct, the board approached the FSCA (Financial Sector Conduct Authority) for guidance. The FSCA referred the board to the adjudicator and advised that a criminal complaint be laid.”

The employer is bound by the rules of the fund and section 13A of the Act and section 37(1)(a) of the Act makes non-compliance with section 13A a criminal offence for which one can be held liable on conviction to a fine not exceeding R10 million or to imprisonment for a period not exceeding 10 years, or both.

According to the report, the adjudicator ordered registration of the affected employees with the fund, payment of arrear contributions, and the submission of all schedules to the fund after a proper analysis of the facts and the law, including the rules of the fund.

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26% more complaints received

The adjudicator received 8 858 complaints in the financial year, an increase of about 26% compared to the previous year when the level 4 and 5 lockdowns were implemented. During this time, 8 382 complaints were closed thanks to the revised complaint management process.

Withdrawal benefits remained the highest category of complaints at 45%, while complaints about the non-payment of retirement fund contributions (section 13A compliance) came in second at 40%.

Complaints about withdrawal benefits and section 13A complaints are due to failure of employers to pay contributions and delays in payment of withdrawal benefits.

In addition, the number of complaints relating to payment and distribution of death benefits increased.

The report also notes that the number of complaints received about poor service is a concern, as they represent 50.43% of complaints, that are mostly about poor or inadequate communication by funds about payment of contributions and benefits.

The next highest number of complaints is about non-payment or late payment of claims, followed by information provided and performance of products. These are outcomes that funds and administrators can control if they take advantage of the RTF process and the adjudicator urges them to improve on TCF outcomes.

Who is the Pension Funds Adjudicator?

The office of the adjudicator was established in terms of the Pension Funds Act to dispose of pension fund-related complaints lodged in terms of the act and complaints designated to the Pension Funds Adjudicator in terms of section 211 of the Financial Sector Regulation Act.

The main objective of the adjudicator is to ensure that the rights of consumers of pension products and services are protected and they are treated fairly within the prescripts of the law.