PENSION

Facts and issue: This application pertains to outstanding pension and provident fund contributions for the period of May 2020 to July 2020. The applicant sought payment in the amount of R93,715.53 which is calculated based on contribution schedules duly received but for which payment remains outstanding for the period January 2020 to April 2020. The employee members did not receive any pension and provident fund benefits despite receiving a net salary which excludes their pension and provident fund contributions.

Discussion: The employees received their net salaries (presumably reduced) and their contributions towards their pension and provident were deducted from their salaries. But on Paolo’s (second respondent’s) version, the deducted pension and provident portions were utilised to subsidise employee salaries. On this version the fund deductions were clearly deducted from the salaries and not paid over to the applicants. Paolo calls this an adjustment of payment of employee compensation which the applicants do not accept; nor do they agree as the actual deductions were not made from the employees' salaries. Paolo has demonstrably failed to substantiate this allegation with relevant and objective evidence. Paolo cannot unilaterally decide not to submit contribution schedules. This runs contrary to the purpose, spirit and import of the Pension Funds Act 24 of 1956 and, to allow this type of conduct would undermine the provisions of the PFA.

Findings: Given the nature of the relief sought and the serious prejudicial consequences of the failure to comply with the provisions of the PFA to the employees and other members of the applicants, the respondents are not entitled to excuse themselves from these very serious statutory obligations. Their explanations are not plausible. Personal liability is statutorily regulated by the PFA and under the circumstances, applies. The applicants therefore require the schedules and returns for the period May 2020 – July 2020 to finally do the outstanding calculations. The employer is statutorily obliged to pay over contributions for which it is liable. Paolo should have ensured that the employer's portion towards the employees' pension and provident funds were made. He has not done so, despite on his version having used personal resources to fund other expenses of the employer.

Order: The second and third respondents are directed to provide the applicant with the relevant documents within 30 calendar days of the date of the court order.

Facts and issue: The applicant seeks that the non-surrender clause contained in the policies concluded between the applicant and the respondent be declared unreasonable, unlawful and unenforceable. The applicant instructed the GEPF to transfer his full retirement benefit to the respondent. According to the applicant, the GEPF did so, and gave a tax directive which indicated that the applicant would be entitled to a tax free lump sum of R3,528,985.63. The applicant alleges that the respondent only paid an amount of R3,132,068.94 according to a ‘tax directive’ generated by ‘Personal Preservation Pension Fund’.

Discussion: The applicant disputes in reply that the contents of the documents were fully explained to him by Mr Domingo. The applicant alleges that Mr Domingo never informed him before the applicant concluded the investment, that the applicant could not cancel his investment or transfer it to another financial service provider, should the applicant not be satisfied with the policies or the manner in which they are dealt with. The applicant alleges in reply that Mr Domingo deceived him into signing the quotations without the applicant seeing the material terms thereof. The applicant further alleges in reply that Mr Domingo failed to explain to him that his investment could not be cancelled or withdrawn. According to the applicant, Mr Domingo was quick to charge the applicant exorbitant commission, while Mr Domingo failed in his duties, and misrepresented the policies, causing prejudice to the applicant.

Findings: It is common cause that the policies in question were taken out by the applicant. The relevant quotation, which was accepted and signed by the applicant, expressly records under the heading: Cancellation of policy; that the preservation plan may not be cancelled, commuted or reduced. The respondent contends that the policies in question can in law not be cancelled, and, by virtue of their terms and nature, are not capable of being cancelled, and further that such fact was disclosed to the applicant, before entering the policies, as required by the said rule. On the evidence presented, the court agrees. The policies in question cannot in law be cancelled.

Order: The application is dismissed.

Facts and issue: The Municipality was ordered to pay the Fund an amount of R37,795,476.32, with interest and costs. Subsequently, the Municipality’s bank accounts were attached by the Fund, while the sheriff executed the writ. Only R97,000 was available in the Municipality’s bank account which was then paid to the Fund. The judgment debt still stands for arrear pension fund contributions from the Municipality for its employees. The Fund now endeavours to retrieve the arrear amount for its members by seeking past and future information in respect of the Municipality’s bank accounts to give effect to its current court order.

Discussion: The Municipality has deducted pension fund contributions from the salaries of its employees and failed to pay it over to the Fund. However, no explanation appears to be forthcoming about what happened to the money deducted. The Fund contends that the Municipality has the money it received from its employees and has moved money from one account to another to avoid attachment of same. The Fund therefore seeks an order to furnish a full accounting of each and every withdrawal, payment or transfer from bank accounts of the respondent. They seek an order from this court to obtain copies of bank statements of the relevant accounts and copies of bank statements for the account/s where the equitable shares are held as well as the dates expected by the Municipality to receive such shares. Severe prejudice would result to the Fund’s members whilst contributions remain outstanding. Members would receive increasingly less benefits if retrenched or upon resignation, with some possibly not receiving any benefits at all. The Fund is unable to invest the outstanding amounts which is a statutory requirement, ultimately benefitting the members, with the result that their constitutional right to social security is breached.

Findings: The obligation of the Municipality is simple: it merely must give the instruction to the bank holding its money to dispose of the monies by paying the Fund, but the respondents have made this matter difficult for the applicants. No instruction has been forthcoming. Rather, the Municipality contends that the applicant must use alternative remedies to litigate. This, notwithstanding the fact that there is an existing court order for payment of money. The applicants are unable to give effect to it due to lack of funds, or no funds at all in the respondent’s bank account. The applicant believes that the respondent has money, perhaps in a different account. To this end, if the respondent does not want to comply with the court order, then the court must act and assist the applicant so that the Fund members are safeguarded with their pension benefits.

Facts and issue: The municipality applies urgently for an interdict restraining the fund registered in terms of the Pension Funds Act, 24 of 1956, from processing Mphahlele’s claim to have her pension benefits paid out to her. Relief is sought pending the finalisation of forensic investigations into maladministration and misappropriation of bursary funds by Mphahlele whilst the applicant employed her as a training and development officer.

Discussion: Mr Moloi, appearing for Mphahlele, challenged the applicant’s assertion that it seeks interim relief. He pointed out that the interim interdict is sought pending internal processes, without reference to further proceedings at which the issue of the Mphahlele’s liability will be finally determined. In the circumstances, he argued, the applicant asks for final relief. The applicant must establish prima facie that it has reasonable prospects of success in obtaining a judgment against Mphahlele which would entitle it to receive payments towards the judgment from her pension benefits. The applicant envisages relying on a claim for fraud or theft. The applicant is required to set out the primary facts from which the inferences, the secondary facts, may be obtained. The applicant has not provided primary facts; rather, it has simply jumped to the legal conclusion that the second respondent is guilty of fraud and theft.

Findings: The high watermark of the purported suspicion amounts to R40,000, although no evidence in support thereof has been produced. It thus remains a mystery how the Municipal Manager could allege in the founding affidavit that Mphahlele is suspected of having misappropriated R200,000. The applicant has not shown that it has prima facie right to obtain judgment against Mphahlele which it may satisfy from her pension benefits.

Order: The application is dismissed with costs.

Facts and issue: The dispute centred around the interpretation on when the twelve months period to trace dependants of deceased start to run. The applicant took a view that as it became aware of the death after the twelve months had lapsed, there was no obligation on it to trace the member’s dependants and to pay the death benefit due to them. It took the decision to pay the death benefit into the deceased member’s estate. Aggrieved, the respondent to the office of the Pension Fund Adjudicator. The decision by the Fund to pay the death benefit into the deceased’s estate was set aside. The applicant brought this application to have that decision set aside.

Discussion: Whilst section 37C(1) of the Pension Fund Act 24 of 1956 does not expressly state that the 12 month’ investigation period to trace the dependants of a deceased only commences once the Fund has obtained knowledge of the death of the deceased, the only logical interpretation of this section is that a Fund cannot comply with its obligation if the legislative requirement for its imposition, namely the death of a member, is not made known to the Fund. Any other interpretation would be absurd and defeating the purpose and the spirit of the Act, which is to protect the member’s dependants and give them access to the benefits, without having to compete with other creditors who lay their claims against the estate. If the applicant’s interpretation was to prevail, the Fund would end up with far shorter than the envisaged twelve months to trace and investigate the dependants, upon death of a member as practically, it is near impossible for a Fund to know of the death on the day a member dies.

Findings: The interpretation advanced by the applicant would not only defeat the purpose of the Legislature in enacting section 37C(1) of the Act; but would also fail in ensuring that the Fund carries out its mandate to trace the dependants and investigate their dependency on the deceased member. The Fund could simply sit back instead of being proactive, until the twelve months is over; only for it to claim that it did not investigate because it only became aware of the death after twelve months had lapsed. The applicant’s interpretation is not consistent with the general purpose of the Act that mandates the Fund to be proactive in tracing and investigating. The order made by the first respondent is consistent with the purpose of the Act.

Order: The application is dismissed. The order of the first respondent is confirmed.

Facts: Mr Hillhouse (applicant) is a former employee of Pidelta (first respondent) and was initially employed as its livestock manager but later became the manager of one of its crop farms. He started work in 2015 and in 2021 suffering end-stage kidney failure and was compelled to first undergo regular kidney dialysis and then to undergo a kidney transplant. Disciplinary proceedings were instituted against him in 2023 and it appears that he admitted guilt and his employment came to an end. The charges related to him failing to manage the cattle, grazing his own cattle on the company land and competing with the company. Applicant’s dismissal left him without an income. He wanted to utilise his accumulated pension benefit to meet both his living expenses and his future medical expenses.

Application: The first respondent reported to the pension fund that it had suffered financial losses due to the conduct of the applicant and that it had laid criminal charges related to the theft of its cattle. It requested that the pension fund exercise its discretion in terms of the provisions of section 37D(1)(b)(ii) of the Pension Funds Act 24 of 1956 to withhold payment to the applicant. The applicant seeks relief that he be entitled to withdraw his pension fund interest held through the first respondent and administered by Alexander Forbes (second respondent).

Discussion: The purpose of this section, unashamedly, is to protect the interests of employers against the dishonest conduct of employees. It is now settled law that section 37D allows a pension fund to withhold a pension benefit, even where an employee has not admitted liability to the employer or where a judgment has not yet been obtained against an employee. The discretion afforded to pension funds generally to withhold pension benefits by the Act is mirrored by the specific sub-rules governing the pension fund. The applicant, as a member of the pension fund, is bound by the sub-rules. The pension fund had a discretion to withhold the applicant’s pension benefits. It is clear from the wording of s 37D(1)(b) of the Act that the touchstone for the existence, and exercise, of the discretion is the presence of allegations of theft, dishonesty, fraud or misconduct on the part of the member of the pension fund.

Findings: The applicant has not established a clear right to the relief that he seeks. But for the existence of section 37D of the Act, and sub-rules 11.1 and 11.3 of the pension fund rules, the applicant’s argument may have been more attractive and the existence of the right contended for more certain and definite. But that section of the Act and the sub-rules exist and they prohibit the applicant’s right to claim payment of his pension benefit in the face of allegations of dishonest conduct by him. Those allegations have been made and properly assessed by the pension fund and have been accepted for the time being by it. The right to claim payment is therefore not a clear right. In fact, it is not a right at all. Absent a clear right, it follows that the second requirement for a final interdict, an act of interference with a clear right, has also not been established. The applicant has thus failed to establish any of the grounds that must be present for the granting of a final interdict.

Order: The urgent application is dismissed.

MOSSOP J

Facts and issue: The applicant brought this urgent application in terms of Rule 6(12) of the Uniform Rules of court seeking interim interdict to restrain the National Fund for Municipal Workers (first respondent) from paying the pension interest and/or processing the pension fund payout of the Mahlogonolo (second respondent) pending the finalization of forensic investigation regarding the maladministration and misappropriation of bursary funds which Mahlogonolo was responsible to administer as an employee of Lesedi Local Municipality prior to her dismissal as an employee.

Discussion: During Mahlogonolo’s tenure as an employee, she was charged with serious acts of gross misconduct and subsequently found guilty of amongst others of fraudulent misrepresentation of the bursary funds, which was meant to skill and equip the employees of the municipality and as a consequence, she was dismissed. The applicant submitted that it has a right to claim the damages caused by the second respondent by reason of any theft, dishonesty, fraud or misconduct by Mahlogonolo as contemplated in Section 37 D (i)(b)(ii)(bb) of the Pensions Fund Act, Act 24 of 1956 and it should be successful in such an action for damages having regard to Mahlogonolo’s actions which led to her dismissal. This right, the applicant submitted, is threatened or likely to be infringed by payment of the pension benefits to Mahlogonolo, which will cause irreparable harm. The applicant contends that it’s right, to recover funds lost through the fraudulent misrepresentation by Mahlogonolo, will be irreparably infringed should the pension interest be paid to Mahlogonolo and she spent it while the harm that Mahlogonolo will suffer on an interim withholding of the funds for forensic investigation is minute in comparison as it’s only an interim hold. The applicant contented that it’s right will be infringed if the relief said is not granted in that Mahlogonolo will squander the pension benefits and the applicant will not be able to recover the misappropriated monies. The applicant made out a case for the interim relief sought.

Findings and order: The respondent is interdicted and restrained from making a payment of pension interest to the second respondent pending finalisation of the forensic investigation into maladministration and misappropriation of bursary funds.

Facts and issue: The applicant is a retired educator who was employed by the Department of Education. She retired on the ground of ill health. The dispute between the parties concerns the quantification of applicant’s pension benefits by the respondent following her retirement. The applicant asserts that her benefits were incorrectly calculated by the respondent who relied on an incorrect date as to when her pensionable service commenced. 

Discussion: By failing to follow up or investigate the information at its disposal in order to rectify or confirm the date applicant became entitled to a pension, the respondent acted unlawfully, unreasonably and procedurally unfair. This is so because as provided for in Section 3(1) of the Promotion of Administrative Justice Act. Administrative action which materially and adversely affects the rights of legitimate expectations of any person must be procedurally fair. For respondent to simply state that it does not keep records of employers and substantially relies on Form Z102 which is completed by her employer is not enough and is therefore not procedurally fair. The applicant has made out a case for the order she seeks. 

Findings: The respondent’s failure to correct its records relating to the applicant’s pensionable service period be judicially reviewed and set aside as being unlawful administrative action. The respondent takes such administrative or other steps as may be necessary to correct its records so as to reflect the applicant’s pensionable service discharged with the Department of Education, commencing on 12 February 1987 and terminating on 31 October 2019. 

Facts: Mr Malesela was employed in the public service, becoming a member of the GEPF, as a police officer. Upon his retirement Mr Malesela received his pension until the date of his passing in 2003. The customary marriage between Malesela and Ms Seloana was concluded in 1987. By then he was already married, also in terms of customary law, to Johanna. When Mr Malesela passed on Ms Seloana and Johanna became entitled to be paid a pension from the GEPF, in equal amounts. Thus, both received a half portion of a spousal pension, based on fifty percent (50%) of the deceased's pension during his life. Johanna passed on in 2017, bringing an end to the payment of her portion of the spousal pension. Thereafter Ms Seloana continued receiving her spousal pension on the basis of that calculation, and still does.

Application: Having become the remaining surviving spouse, Ms Seloana requested the GPAA and GEPF to recalculate her spousal pension with the view that she would start receiving the full benefit. She is aggrieved by the refusal to recalculate her spousal pension and the explanation provided. This application was instituted to challenge the rule on which the decision taken by the GPAA and the GEPF was based, the substratum of which challenge is that Rule 14.6 of the Rules of the Government Employees Pension Fund unlawfully discriminates against women in polygamous marriages.

Discussion: The respondents contend that this court is the incorrect forum to adjudicate the application. They base their contention on the concession by Ms Seloana that the application is governed by the provisions of the Promotion of Equality and Prevention of Unfair Discrimination Act 4 of 2000. This application involves more than just the question unfair discrimination, but a challenge of legislation which the High Court can adjudicate. There seems to be common acceptance that the equal division, which occurs at the death of a pensioner, serves a legitimate purpose. The purpose is to ensure that people married to the same person are benefitted equally out of his or her pension. This rule is challenged on the basis that it does not cater for recalculation of pension benefits when one of the surviving spouses dies, that is after the death of the pensioner. On that score, it is averred, it discriminates on a listed ground of gender, because self-evidently, polygamous unions are commonly between one man and a number of women. Further, that other women who are not in polygamy are not affected by the rule.

Findings: Johanna died some 14 years after the death of the deceased. During the entire period of her life post the death of the deceased both she and Ms Seloane, as surviving spouses, received their share of the pension and there was no question of unfair discrimination. They both understood it to be inherent in the nature of their marriage to the deceased and that they were each entitled to receive equal portions of what was left of the pension benefits. The governmental purpose in this case is the protection of the interests of women in polygamous marriages. It is common cause that the rules do not cater for recalculation of pension benefits upon the subsequent death of one of the surviving spouses in polygamous marriages. The payment of lesser benefit starts at the death of a pensioner and continues until the surviving spouse(s) also pass on. The court is not satisfied that the rules discriminate unfairly against women in polygamous marriages and that they ought to be declared invalid.

Order: The application is dismissed.

MAKOTI AJ

Facts: Mr Moeketsi was employed by Mafoko Security (applicant) as a security officer from 2014 to 2022. He was a member of a pension fund, the Private Security Provident Fund, until he was dismissed. When Mr Moeketsi’s employment was terminated, he did not receive his full withdrawal benefit from the Fund. He lodged a complaint with the Pension Fund Adjudicator against the applicant, for amongst other things, its failure to timeously register him as a member of the Fund and to pay all the provident fund contributions that were due to him over to the Fund. He also reported the applicant to the Financial Services Conduct Authority. The adjudicator ordered the applicant to pay the Fund the arrear contributions. The determination was filed with the registrar and thus became an enforceable court order.

Application: In Part A (currently before this court) the applicant seeks an order interdicting and restraining the respondents from executing a writ of execution, pending the outcome of Part B. In Part B the applicant seeks an order for the review and setting aside of the determination taken by the Pension Funds Adjudicator, established in terms of section 30B of the Pension Funds Act 24 of 1956. The applicant had been found to be in arears of R45,033.22 and was also deemed liable for late payment interest (LPI) which had been recalculated at R40,289.35.

Judgment creditor: The adjudicator rendered a verdict in favour of Mr Moeketsi and having obtained a judgment in his favour, he is entitled to obtain satisfaction of it from the applicant, who is the judgment debtor. It matters not that the determination stipulated that the R45,033.22 must first be paid to the Fund and then to Mr Moeketsi. It is his accrued benefit that has been reduced and the claim for the arrears continues to be his and not the Fund's. The Fund, as far as the arrears contribution is concerned, is in a neutral position. It suffered no loss and is simply a conduit through which the benefit is to be paid to Mr Moeketsi. He is entitled to issue and execute the writ against the applicant. The proceeds of the sale in execution must however be paid over to the Fund in accordance with the determination and not directly to Mr Moeketsi.

Interest in terms of section 13A(7): The determination did not provide for the payment of the LPI to Mr Moeketsi. The section does not stipulate that the LPI payable is for the benefit of the employee. The LPI as defined in section 13A(7) is levied against the employer or the person accountable for transferring contributions to the fund who neglects to make payments within the prescribed time period. Its penal character is further evident from the requirement that it be computed using the compound interest method. The interest under section 13A(7) is distinguishable from the interest payable under section 30N. The interest payable in terms of section 30N is interest that the adjudicator determines payable on amounts awarded to the complainant. Mr Moeketsi is accordingly not entitled to the LPI in terms of section 13A(7). The amount reflected on the writ of execution is therefore incorrect.

Order: Pending the determination of Part B, the respondents are interdicted from executing the writ of execution. Each party to pay its own costs.

WINDELL J

Facts: Mr Bhengu commenced his employment with the municipality in 2007 as a Manager: Human Resources. After a disciplinary hearing in 2022, he was found guilty of 8 of 10 misconduct counts and his employment was later terminated. During the course of the disciplinary proceedings the municipality discovered that Mr Bhengu had received an overpayment of his travel allowance in the amount of R416,213.82 and had unduly benefitted at its expense. In 2023, the municipality discovered that Mr Bhengu had resigned his membership of the pension fund and had filed a claim to withdraw his pension benefits. The municipality instituted an action against Mr Bhengu, which action is being defended.

 

Application: For the confirmation of a rule nisi granted in 2022 which interdicted and prevented the pension fund from paying R416,213.82 or any lesser amount held by it as a pension benefit to Mr Bhengu. The sole issue for determination is whether the municipality is entitled to the final interdictory relief pending the outcome of the action instituted by it against Mr Bhengu.

 

Discussion: Mr Bhengu has neither admitted liability, nor has he pertinently dealt with the serious allegations made against him by the applicant. On the other hand, the applicant has not obtained judgement against him in any court of law. The section upon which the applicant relies to protect its right to pursue the recovery of money allegedly misappropriated by its employee is section 37D(1)(b)(ii) of the Pension Funds Act 24 of 1956. It was initially submitted on behalf of the municipality that a letter by the pension fund constituted a final refusal to withhold the monies, however, there was also a concession that all that the pension fund did in such correspondence was repeat the requirements of section 37D(1)(b)(ii).

 

Findings: Given the prima facie facts alluded to in the founding affidavit and the annexures it is evident that the allegations made by the municipality point to the fact that Mr Bhengu received payment of the amount claimed arising from dishonesty and misconduct. Although s 37D(1)(b) does not specifically make provision for the withholding of a benefit, having regard to Highveld Steel & Vanadium Corporation Ltd v Oosthuizen [2008] ZASCA 164 it is evident that to give effect to the purpose of section 37, which is to protect an employer's right to recovery of misappropriated monies, the wording in the section must be interpreted to include the power to withhold payment of the member’s pension benefits pending the determination of an action or acknowledgement of such member’s liability. Once the applicant acknowledges that the letter is not a final decision, then it has regrettably not established the requirements for final relief.

 

Order: The rule nisi is confirmed and varied to read that the pension fund is interdicted from paying R416,213.82 or any lesser amount held by it as a pension benefit to Mr Bhengu pending it making a final decision on the municipality’s written request to withhold such monies. Mr Bhengu is directed to pay the costs occasioned by the application.

HENRIQUES J

Facts and issue: The applicant launched the application in terms of section 30 P of the Pension Fund Act, 24 of 1956 for an order to set aside the determination by the fourth respondent of a complaint lodged by the second respondent. There are two issues to decide namely whether the determination by the fourth respondent has prescribed or is time barred and whether the complaint procedurally complied with section 30A (3) of the act.

Discussion: The applicant prior to 2016 faced serious opposition from some of its employees against the deduction of pension fund contributions from their salaries resulting that some employees were not registered with the first respondent and that no pension deductions were made and paid over to the first respondent. The applicant registered all its employees with the first respondent since February 2016. The applicant thereafter proceeded to deduct the pension fund contributions from the salaries of all employees and paid over to the first respondent. The applicant contends that it made all payments required to the fourth respondent and that there were no out-standing contributions due. The fourth respondent indicated in its determination that the second respondent received three withdrawals from the pension fund in the amount s of R5 367.79; R33 811.76 and R 9325.15. It is however not clear from the determination by the fourth respondent when these withdrawals were done towards the second respondent.

Findings: The complaint by the applicant is that the fourth respondent failed to calculate the determination taking into account that it was restricted to the years prior the complaint received. It is clear that the fourth respondent could not include any period from March 2005 to December 2008 and from August 2010 to February 2016 in its determination.

Order: The determinations in respect of the second and third respondents are set aside in terms of section 30P of the Pension Fund Act, 24 of 1956.