Bank blocks pension payout

No one should withhold your pension fund unreasonably and indefinitely after you have admitted in writing that you owe your employer.

Justinus Masoding, 34, of Bolobedu in Limpopo, admitted in writing he was liable to repay R16000 he allegedly stole from First National Bank (FNB) in 2013.

Masoding said there was no pending legal action against him, but FNB instructed its pension administrator not to release the balance of his pension fund.

According to the provisions of section 37D of the Pension Fund Act, your employer cannot take more compensation than you have caused.

The general rule in terms of section 37A is that pension benefits belong to a member and they are not capable of being reduced, transferred, ceded or attached for execution unless an employee has stolen from or defrauded an employer.

FNB has ordered Momentum, the administrator of its employees pension fund, to withhold R148000 of Masoding's money.

On June 2, Pension Funds Adjudicator Muvhango Lukhaimane ruled that a provident fund is entitled to withhold a withdrawal benefit pending the outcome of legal proceedings against the member.

However, the employer must exercise this power reasonably and not indefinitely, Lukhaimane said.

Masoding claimed he assisted a client, updating his banking information, and unbeknown to him, he had assisted a fraudster who later defrauded the bank of R16000.

Section 37D(1)(b), which allows a fund to make a deduction from an employee's benefit to settle a debt to the employer, states the amount must be deducted on the date of the employee's retirement or resignation.

Masoding said he was dismissed following accusations that he stole or facilitated fraud. He accepted his negligence and agreed to repay this money to compensate the bank for its loss.

He said the employer opened a case against him, but it was provisionally withdrawn.

"I was later pressured to write a letter admitting liability as I was told they will not release my pension fund if I refused to admit liability. I succumbed and wrote it," Masoding said.

He was dismissed in 2013.

Masoding said he later discovered that his file was missing from the magistrate court's clerk's office, making it impossible for his case to proceed. He said this would allow the fund to withhold his pension indefinitely.

The father of five said his wife deserted him as he could not support his family.

"I have since moved back home and depend on my mother's pension grant for survival."

Head of FNB's crime and investigation unit, Melvin Yogolingam, said a criminal case was pursued against Masoding, but was withdrawn in court for further investigation.

Withdrawal of a criminal case does not equate to an acquittal, he said.

He said Masoding's pension was withheld in terms of the act.

Lukhaimane said her office had not received a formal complaint from Masoding, but it would appear the fund is acting unlawfully if it has withheld an amount in excess of the damages caused to FNB.

Lukhaimane said the criminal matter may proceed to determine his criminal liability, however, this should not result in his money being withheld further as he has admitted liability.

She said her office has noted with concern that banks are very quick to withhold pension benefits because of monies owing due to criminal misconduct, but without following the prescribed process.

"The abuse of the provision of section 37D(1)(b) of the Pension Funds Act has been reported to the registrar of Pension Funds Act at the Financial Services Board so that the section may be amended," Lukhaimane said.