Check statements regularly, writes Isaac Moledi
Old Mutual has warned employees belonging to retirement funds to check their fund statements regularly to ensure that money deducted from their salaries is paid into their pension fund.
Old Mutual was reacting to a recent ruling by the Pension Funds Adjudicator, Vuyani Ngalwana, against an employer who did not transfer his employee's contributions.
Because of the seriousness of the issue, Ngalwana has sent a copy of his determination to the finance minister and the Financial Services Board with a request that the penalties against such employers be increased.
An employer who fails to transfer an employee's monthly contributions to his or her pension fund faces a R2000 penalty, which the adjudicator feels is too little considering the financial pain the employer inflicts on the employee.
Ngalwana has also asked the National Director of Public Prosecutions to take action against the company.
In the case where the employer has no such fund, despite deducting money from employees, the matter is handed over to the police.
Tim Cumming, managing director of Old Mutual Corporate, says employees should not assume that just because their pension fund contribution is deducted from their salary, it is paid into their pension fund.
"Members should take responsibility for all aspects of their financial well-being, which includes checking up on their pension-fund contributions.
"They must ensure that their contributions are not only deducted, but that it is paid over regularly to the pension fund as it should be," says Cumming.
He says pension fund members should be more vigilant.
"It is the same as checking your bank statements regularly."
Cumming said that though the majority of trustees of pension funds took their role of protecting the interests of their members very seriously, there are undoubtedly trustees who are not on top of all the issues.
"In the interest of good governance, such trustees need to be more meticulous in the execution of their duties."
Cumming says that by law members of pension funds should at least receive a yearly statement from their pension fund showing the contributions made to the fund.
"Ideally they should be receiving quarterly statements from their pension fund or pension fund administrator."
Cumming also emphasises the importance of employing the services of a reliable and robust pension fund administrator.
Cumming says good fund administrators must have:
l Transparency in dealings with its members;
l A single point of contact;
l Accurate member records for members to access; and