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Judicial Answer to the Application of a Market Level Adjuster and the Broad Construction of a Complaint under the South African Pension Funds Act

Published online by Cambridge University Press:  01 June 2015

Mtendeweka Mhango
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Abstract

The jurisdiction of the Adjudicator is one of the most litigated and academically debated subjects in modern South African pension law. This note adds to the debate by discussing a recent case decided by the Supreme Court of Appeal in Mungal. In this case, the court construed the Adjudicator's jurisdiction broadly and, in the process, made some important pronouncements which warrant academic commentary. This article argues that Mungal should be welcomed because it clarified that the Adjudicator has jurisdiction to determine disputes against insurers of underwritten pension fund organizations. The author maintains that, by construing the Adjudicator's jurisdiction broadly, the court empowered the Adjudicator to achieve its mandate of disposing of complaints in a procedurally fair, economical and expeditious manner, and to extend services to lay complainants.

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Type
Research Article
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Journal of African Law , Volume 59 , Issue 2 , October 2015, pp. 317 - 328
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Copyright
Copyright © SOAS, University of London 2015 

INTRODUCTION

The jurisdiction of the Pension Funds Adjudicator (the Adjudicator), a tribunal set up under section 30B of the Pension Funds Act 24 of 1956 (PFA), is one of the most litigated and academically debated subjects in modern South African pensions law. This note adds to the debate by discussing a fairly recent case decided by the Supreme Court of Appeal (SCA) in Mungal. Footnote 1 In this case, the SCA had to decide whether the Adjudicator had jurisdiction to determine whether or not an insurer may apply a market level adjusterFootnote 2 to determine the surrender value of a withdrawal benefit from an insurance policy where a member of a pension fund withdraws from the fund before the original contractual retirement date. The SCA ruled that questions of this nature fall within the jurisdiction of the Adjudicator as defined in the PFA. In its ruling, the SCA construed the Adjudicator's jurisdiction broadly and made some important pronouncements which warrant academic commentary.

This article argues that Mungal should be welcomed because it clarified that the Adjudicator has jurisdiction to determine disputes against insurers of underwritten pension funds. Additionally, the note argues that the broad construction of the Adjudicator's jurisdiction by the SCA is a welcome development, not only because it confirms the interpretative practice of the Adjudicator and some high courts, but more importantly because it brings certainty in the law governing the Adjudicator's jurisdiction over the application of a market level adjuster.Footnote 3 The article maintains that, by construing the Adjudicator's jurisdiction broadly, the SCA empowered the Adjudicator to achieve its mandate of disposing of complaints in a procedurally fair, economical and expeditious manner, and to extend services to lay complainants.

THE MUNGAL CASE

Facts of the case

In this case, Mr Mungal, who was a member of the Protektor Preservation Provident Fund (the PPP Fund) and Mr Freeman, who was a member of the South African Retirement Annuity Fund (SARAF), lodged separate complaints with the Adjudicator against Old Mutual. Since the complaints dealt with identical questions, the Adjudicator dealt with them together. After considering the complaints, the Adjudicator issued determinations that required Old Mutual to pay certain sums of money to the complainants. Old Mutual was aggrieved by the decision and appealed to the High Court under section 30P of the PFA to have the determinations set aside. The High Court heard the two appeals together and ruled that the Adjudicator had no jurisdiction to determine the dispute, setting aside the Adjudicator's determination. It reasoned that the fact that the policies in question were issued to a pension fund constituted a minor and inconsequential feature of the dispute, and that a dispute relating to these policies did not amount to a complaint within the meaning of the PFA. The complainants appealed to the SCA.

To put the ruling into context, the SCA began by explaining the types of pension funds that were involved. It explained that the PPP Fund and SARAF were designed to accommodate employees to whom a benefit has become payable in consequence of the termination of their participation in another pension fund.Footnote 4 Both funds in this case were underwritten, which means that their only assets were claims under long-term insurance policies.Footnote 5 It noted that, when a person joins a preservation fund, the money that is paid into the fund is used to pay the premiums on an insurance policy taken out by the fund for the benefit of the participant. Usually the parties to the policy are the fund and the insurer, and the participant becomes the life assured.Footnote 6 Any benefits that accrue under the policy are paid by the insurer to the fund and the moneys are then available to pay the participant's benefits in accordance with the rules.Footnote 7

In this case, the policies that were taken out when Mr Mungal and Mr Freeman joined their respective funds were both issued by Old Mutual. Under these policy arrangements, Mr Mungal, for example, was the life assured under the policy with the PPP Fund. Upon maturity, Old Mutual was obliged to pay the proceeds of the policy to the PPP Fund, which it would use to pay Mr Mungal the benefits due to him under the rules.

The rules of the PPP Fund provided for the payment of benefits in three circumstances: upon the participant reaching retirement age; upon the death of the participant; and upon the participant withdrawing from the fund. Withdrawals from the PPP Fund were governed by rule 6, read together with paragraph (A) of the definition of “accumulated credit” in rule 1 and rule 8(4) which dealt with the policy options chosen by Mr Mungal. These rule provisions provided that the cash value of the policy at the date of surrender would be the appropriate surrender value, which would depend on the value as at the date of the underlying investment portfolio. In other words, the withdrawal benefit was the value of the investment on the date of withdrawal.

Upon a participant's withdrawal, the surrender value of the policy taken out in respect of that participant is paid by Old Mutual to the PPP Fund. Clause 5 of part 3 of the policy contained the following provision relating to the determination of the surrender value: “[t]he amount of surrender value will be determined by Old Mutual at the time of surrender, and will take into account disinvestment costs, recovery of un-recouped expenses, any debts against the policy and legal limits enforced.”

According to Old Mutual, the determination of the surrender value under this rule includes an account of the appropriate market adjuster. The complainants disputed this interpretation of the rule.

The SCA observed that Old Mutual was also the administrator of the funds in this case,Footnote 8 and that, while the funds were under the control of boards of management as required by section 7 of the PFA, the responsibility for their administration was assigned by the board to Old Mutual under a contract. This contract required Old Mutual to perform all the functions that generally attach to the administration of such funds.Footnote 9

Old Mutual objected to the Adjudicator's jurisdiction to make orders against it, arguing that the complaints by Mr Mungal and Mr Freeman did not fall within the definition of a complaint in the PFA. Further, it argued that any complaint against Old Mutual should have been directed to the Ombudsman for Long-Term Insurance.Footnote 10 While Old Mutual did not raise this jurisdictional objection when the matter came before the Adjudicator, the court in Mungal entertained the objection and made some important pronouncements concerning the scope of the Adjudicator's jurisdiction. This article now examines these pronouncements.

The SCA's ruling and reasoning

The SCA found that the complaints in this case were conveyed to the Adjudicator in letters written by Mr Mungal and Mr Freeman.Footnote 11 It noted that these letters were not framed in the language of the definition of a complaint in the legislation, but emphasized that the form in which a complaint is made to the Adjudicator is not critical.Footnote 12 In the SCA's view, the PFA clearly contemplates complaints being made by lay persons who are not expected to have studied the definition with legal expertise and to have framed their complaints accordingly.Footnote 13 What is more important according to the SCA is not the form in which the complaint is expressed but rather the substance of the complaint.Footnote 14 It observed that “[i]f the various elements of the definition are inherent in the complaint that seems to me to sufficiently bring it within the terms of the definition notwithstanding that they have not been expressed in those terms”.Footnote 15

In the context of this case, the complaints were that Old Mutual refused to pay moneys that were said to be due to the respective funds under the policies.Footnote 16 On the other hand, the SCA observed that these complaints could have as well been couched as complaints that Old Mutual refused to claim the moneys on behalf of the funds.Footnote 17 It noted that, since the corollary of Old Mutual's refusal in its capacity as the insurer to acknowledge the validity of the claims is a refusal (as the administrator) to perform its duty to take steps to recover the claims, the rights of participants of the fund under the rules to be paid pension benefits will be thwarted (for as long as moneys due to the fund are not claimed) because the members have no independent rights against the insurer under the policies.Footnote 18

With regard to the jurisdictional question, the SCA's view was that the complaints against Old Mutual are capable of being construed as complaints “relating to the administration of the fund” because complainants will be prejudiced if moneys due are not recovered. Further, it noted that the refusal of Old Mutual to acknowledge the validity of the claims and to take the necessary measures to pursue them is capable of constituting “maladministration of the fund”Footnote 19 as understood in the definition of a complaint in the PFA. Finally, the SCA pronounced that the disputes in this case were certainly “in relation to the fund” and between the complainants and the administrator of the fund as much as between them and the insurer.Footnote 20 It noted that, while these allegations were never made in the letters addressed to the Adjudicator, the allegations were inherent in the nature of the complaints.Footnote 21

Based on this reasoning, the SCA remarked that the order made by the Adjudicator ought to have been directed at compelling Old Mutual, as the administrator of the funds in this case, to acknowledge that the claims were valid and to press for their recovery. The SCA also remarked that, where the insurer is not also the administrator, no purpose might be served by considering complaints of this nature in the future if the insurer is not willing to submit to the conclusions reached by the Adjudicator. However, where the insurer is also the administrator, those conclusions could hardly be ignored, especially if they were to be confirmed by a court in proceedings under section 30P of the PFA. However, the SCA emphasized that these are matters that relate to whether an order is capable of being made that will be effective in resolving a complaint, and not whether the Adjudicator has jurisdiction to consider the complaint. Based on this reasoning, the SCA dismissed Old Mutual's objection to the Adjudicator's jurisdiction to hear the matter.

EXAMINING THE IMPORTANCE OF MUNGAL

The SCA decision in Mungal should be welcomed because it offers clarity on an issue that had remained unclear following the Adjudicator and High Court decisions in an earlier case involving Old Mutual.Footnote 22 Given the nature of the South African pensions sector, the SCA decision has implications for numerous financial products that are governed by different legislation but intimately linked to pension fund business. One of the financial products that is likely to be affected by the SCA decision is re-insurance policies that are entered into between pension funds and insurers for the benefit of pension participants. These policies have become common practice in the South African pensions sector where pension funds re-insure their risk benefits (mostly death or disability) with insurers to guard against the risk of insolvency of the fund if a series of claims are paid out in a short space of time. Professor Jeram explains that, under these policy arrangements, insurers require that they be notified within a specific time after the happening of an event giving rise to a claim.Footnote 23 This allows the insurer to consider the claim within a reasonable period of time immediately after the event.Footnote 24 These time periods are normally captured in the fund rules, and the failure by a pension fund to submit a claim within the specified period may result in a claim being rejected on this basis alone despite its merits.Footnote 25

In most re-insurance policies entered into between a pension fund and insurers, the latter often has the final say on whether or not a participant is entitled to benefits. In the event that the insurer repudiates a claim pursuant to the re-insurance policy, the problem that arises is that such repudiation may immediately translate into a pension fund's repudiation of the fund participant's claim under the rules.Footnote 26 This is a precursor to a greater problem, which is that the fund participant is unable to seek a remedy against the insurer before any court or tribunal because of the lack of privity of contract between the fund participant and the insurer. Furthermore, the pension fund has a defence, which is difficult to overcome, against the fund participant, in that the pension fund submitted the participant's application to the insurer in accordance with the fund rules.Footnote 27 The insurer also has a potential defence against such action by advancing that the Adjudicator has no jurisdiction to hear the dispute because it is not a complaint within the meaning of the PFA.Footnote 28 This problem was intimated by the SCA in Mungal when it examined the effects of a refusal by Old Mutual (as the administrator and insurer) to acknowledge the validity of a claim and noted that the rights of a pension participant are hindered because the participant has no independent legal rights against the insurer under the policy.

The question is how the law can be transformed to ensure that pension participants in these situations are protected. The author submits that one means of ensuring protection is to enforce the pre-existing common law fiduciary duties that require pension funds to act in the best interest of beneficiaries. Case law in South Africa and Australia has demonstrated that pension funds owe pre-existing common law fiduciary duties to act in the best interest of members and beneficiaries at all times; as a result, they cannot enter into a contractual obligation that would disadvantage pension participants or their beneficiaries.Footnote 29 In the context of Mungal, this principle entails that pension funds (and administrators) are obliged to act in the best interest of beneficiaries when contracting with insurers by securing their best interests.Footnote 30 Contracting away their power to decide whether or not a fund participant is entitled to benefits is not consistent with the common law duty of the trustees, because it does not accord with the best interest of the fund or the beneficiaries.

The South African case that demonstrates this predicament is Van der Linde.Footnote 31 In this case, the pension fund re-insured its pension disability benefits with Sanlam Insurance Company (Sanlam) to provide disability benefits to its members. However, the disability benefit payable was subject to a limitation clause set out in fund rule 9.3(1), which concerned re-insurance of the liability and provided:

“The trustees may, after consultation with the actuary, re-insure the benefits with an insurer. The said benefits shall be subject to the conditions imposed by the insurer concerned and each member shall only be entitled to the said benefits to the extent that he is accepted by the said insurer for such benefits provided that the trustees may, in their absolute discretion and after consultation with the actuary, make provision for payment out of the reserve account of part of any benefit which has been reduced or for payment of the whole benefit, where the said insurer has refused to admit a claim in respect of any benefit.”Footnote 32

Under this rule, the member's eligibility for a disability benefit was dependent upon the acceptance of the claim by Sanlam and the value of the claim, only to the extent that Sanlam was prepared to admit. However, the rules provided the board with discretion to make payment out of the reserve account of any part of a benefit which had been reduced, or to make payment of the whole benefit where the insurer had refused to admit a claim. When Sanlam repudiated the disability claim, the pension fund refused to pay out benefits under the fund rules on the same grounds that were submitted by Sanlam for its refusal. The Adjudicator dismissed the pension fund's stance on two grounds.

First, the Adjudicator noted that rule 9.3(1) was unacceptable, to the extent that it made eligibility of benefits dependent on acceptance by Sanlam because it went against the grain of the fiduciary duties of the board of the fund. In a well-articulated dictum, the Adjudicator stated:

“There is an alarming trend in the pension industry of retirement funds in their rules making the eligibility of a member for a disability benefit dependent upon an insurer accepting a disability claim from the fund under a re-insurance policy, so that in the event of the insurer repudiating the fund's application presumably on behalf of a member, that immediately translates into the fund's repudiation of the member's application under the pension fund rules. This is a matter of concern because its effect is that the fund piggy-back on a reinsurance policy they have concluded with the insurer, thereby shirking their fiduciary responsibilities towards their members. This kind of arrangement is outlawed both by the Long-Term Insurance Act 52 of 1998, and the Short-term Insurance Act 53 of 1998, and that if this practice is not acceptable in long-term and short-term insurance agreements, it must be especially unacceptable in pension fund rules. It is my view that arrangements of this kind ought not to be allowed in pension fund rules.”Footnote 33

Secondly, the Adjudicator noted that the pension fund board had discretion to pay benefits pursuant to rule 9.3(1), which gave the board two distinct sets of discretionary powers. The first was the discretion to decide independently whether a member is permanently disabled for the purposes of rule 1.5. The second was the discretion to make payment, in whole or in part, of any benefit where Sanlam had refused either to admit a claim or to pay the claim in its entirety. The Adjudicator ruled that, in exercising this discretion, the board must look at all relevant factors.

The Adjudicator found that the fund had not investigated the merits of the claim independently but had blindly relied on Sanlam's investigation of the matter, and had determined its position solely with reference to Sanlam's position. Further, that in relying on Sanlam's investigation in the face of other conflicting expert opinions, the fund had failed to exercise its discretion properly. Consequently, the fund was ordered to reconsider its decision.

The Superannuation Complaints Tribunal, established under the Australian Superannuation (Resolution of Complaints) Act 1993, was presented with a case similar to Van der Linde. In that case, determination number D06/07/136,Footnote 34 the complainant complained about the decision to reject her claim for total and permanent disablement. The fund took the view that it had no role to play in the matter because of a deed provision, which stated:

“The question as to whether the participant or member's circumstances constitute temporary disablement in respect of an insured benefit shall be decided by the insurance company underwriting the insured benefit; and the question as to whether the participant's or member's circumstances constitute total and permanent disablement in respect of an insured benefit shall be decided by the life insurance company underwriting the insured benefit with the consent of the trustee.”Footnote 35

The tribunal's view was that the fiduciary duties of the fund to its participants, including the complainant, in this trust deed provision are highly undesirable and, in any event, such a provision does not absolve the board from making an independent decision on the merits of a claim by a participant that he or she is totally and permanently disabled. The tribunal found that the board made no formal decision, kept no formal minutes of having dealt with the matter at a proper level and in no way tried to resolve the matter. Therefore, on the substantive issue of the decision to reject the total and permanent disablement benefit claim, the Tribunal concluded that the decisions were unfair and unreasonable and substituted its own decision that the complainant was entitled to both benefits with interest.

These cases demonstrate that pension funds have pre-existing common law fiduciary duties to act in the best interest of participants and beneficiaries, and that the scope of these duties prevents them from entering into contractual obligations or adopting or enforcing fund rules that may prevent pension funds from determining benefit entitlements under fund rules. Hence the SCA ruling in Mungal bolsters the need for the Adjudicator to follow the pronouncement in these cases in circumstances where “members have no independent legal rights against the insurer under the policies”,Footnote 36 similar to life or disability policies commonly sold by insurers to pension funds.

Furthermore, in an obiter statement directed at the type of orders the Adjudicator ought to issue in these matters, the SCA reasoned that, since Old Mutual was also the administrator of the fund, its refusal to acknowledge the validity of the claims by the complainants and to take necessary steps to pursue them was capable of constituting maladministration of the fund in terms of the definition of a complaint in the PFA;Footnote 37 and that the disputes in these cases were certainly in relation to the fund, as they were between the complainants and the administrator of the fund, thereby bringing them within the definition of a complaint in the PFA.Footnote 38 The allusion from the SCA is that the Adjudicator's order ought to have been made against Old Mutual as administrator of the fund to acknowledge that the claims by the complainants were valid and to press for their recovery.

What is significant about the clarity that emerges from the SCA ruling is that it is possible for a complainant, like the complainants in Mungal, to establish the Adjudicator's jurisdiction under the PFA by alleging that the actions of an insurer, who happens to be the administrator of the fund in question and who repudiates claims by members of the fund, amount to maladministration because such an allegation relates to the fund and qualifies as a complaint under the PFA. While this is a significant ruling, it is relevant to the extent that a complainant is able to invoke such allegations before the Adjudicator when lodging a complaint. Otherwise, as with the complainants in Mungal, failure to allege maladministration by an administrator of a fund, for the purpose of demonstrating subject matter jurisdiction under the PFA, may lead to dismissal for want of jurisdiction. Therefore, it is important for future complainants to allege maladministration on the part of the administrator in order for a dispute to be properly before the Adjudicator.

Another important aspect of the Mungal ruling is that the SCA acknowledged that most complainants who lodge complaints with the Adjudicator are lay persons and may not have studied the definition of a complaint so as to frame their complaints accordingly. It is an important development for the SCA in Mungal to pronounce that “what is important in any complaint is its substance and not the form”. According to the SCA “if the various elements of the definition are inherent in the complaint that seems to sufficiently bring it within the terms of the definition notwithstanding that they have not been expressed in those terms”.Footnote 39 What this means is that the Adjudicator will have to focus on the substance of a complaint and determine whether or not the elements of the definition are inherent in the complaint. If they are, then jurisdiction is deemed to be established. Further, the Adjudicator will have to endeavour to interpret the substance of a complaint (where the elements of the definition are inherent in the complaint) and align it with the PFA for the purpose of establishing jurisdiction.Footnote 40 Put differently, the Adjudicator may not dismiss a complaint for lack of jurisdiction on the basis that a complaint was not drafted properly to convey the elements of the definition of the complaint in the PFA.

THE MUNGAL RULING VIEWED TOGETHER WITH THE INTERPRETIVE PRACTICE OF THE ADJUDICATOR

The SCA ruling confirms the interpretive practice of the Adjudicator and some high courts concerning the Adjudicator's jurisdiction. The Adjudicator has broadly construed the elements of a complaint as defined in the PFA.Footnote 41 This is reflected in a number of cases such as Seloane, where a fund defended a complaint by objecting to the Adjudicator's jurisdiction. The Adjudicator rejected this contention and reasoned that “the definition of a complaint does not require the complaint to expressly allege the cause of action, but rather it may be inferred from the facts of the case supporting the legal basis of the claim”.Footnote 42 Consistent with Seloane, in IBM South Africa Pension Fund the Adjudicator rejected an argument that the complaint had not fully set out the complaint as defined because in his view “the main thrust of the complaint is clear from all the documents filed in connection with the complaint read together”.Footnote 43

What is more, before the SCA ruling in Mungal, a few high court opinions had confirmed this broad construction of a complaint as defined in the PFA.Footnote 44 The most notable opinion is by Judge Davis in Central Retirement Annuity Fund,Footnote 45 where he ruled against “a very formalistic reading of the complaints procedure in the Act because to do so runs counter to the very purpose of the complaints procedures provided for in the pension legislation”.Footnote 46 Legal commentators have welcomed the broad construction of the definition of a complaint in the PFA.Footnote 47 Therefore, this article submits that the SCA ruling in Mungal should be welcomed for providing clarity on the use of a market adjuster in calculating withdrawal benefits, and for the broad construction of a complaint as defined in the PFA.

CONCLUSION

The question of whether a pension fund is entitled to use a market level adjuster to determine a withdrawal benefit after an early termination of underwritten pension policies has been the subject of intense litigation in the last several years. The SCA's ruling in Mungal is important because it provides clarity on these matters by confirming that pension funds can rely on existing practices. The SCA ruling in Mungal is also important because it confirms that the Adjudicator has jurisdiction to determine disputes involving the application of a market level adjuster, and the interpretative practice of the Adjudicator and high courts for their broad construction of the definition of a complaint as defined in the PFA. The effect of Mungal is that it will ensure that more unsophisticated complainants are not excluded from accessing justice through the Adjudicator for want of jurisdiction.

Footnotes

1 Mungal v Old Mutual Life Assurance Co SA Ltd; Freeman v Old Mutual Life Assurance Co SA Ltd [2010] 1 BPLR 11 (SCA) (Mungal).

2 “A market level indicator also known as a market-value adjuster is simply an actuarially determined rate to calculate downwards a fund's market value against its smoothed value, when the fund's market value is below its smoothed value, for an investor who surrenders his policy before it matures. It is not applied when the fund's market value exceeds its smoothed value. Its purpose is to protect investors who remain in the fund, to ensure the fund's assets are not eroded by investors who exit early at times of market weakness. The market level indicator is the mechanism by which the cross-subsidisation, which enables the ‘smoothing’ of returns, can take effect. It is always a downwards adjustment; the flip-side is bonuses, which are always upwards”. See Today's Trustee “Smooth-bonus policies: Out of the rough” (December 2008), available at: <http://www.totrust.co.za/200811_bonus.htm> (last accessed 2 May 2013).

3 N Jeram “Jurisdiction of the Pension Funds Adjudicator in respect of complaints by underwritten insurers” (2010) Insurance and Tax Journal 1.

4 Marx, G and Hanekom, KThe Manual of South African Retirement Funds and Other Employee Benefits (2007, LexisNexis) at 16–17, discussing the different kinds of pension funds, including underwritten funds.

5 Mungal, para 4.

6 Footnote Ibid.

7 Footnote Ibid.

8 Id, para 5.

9 Footnote Ibid.

10 The Ombudsman for Long-Term Insurance is accredited under the Financial Services Ombud Schemes Act 2004.

11 Mungal, para 8.

12 Footnote Ibid.

13 Footnote Ibid.

14 Footnote Ibid.

15 Footnote Ibid.

16 Id, para 9.

17 Footnote Ibid.

18 Footnote Ibid.

19 See also Spearman v Salt Rock Hotel Pension Fund [2001] 9 BPLR 2526; Khambule v CNA Ltd (1) [2001] 9 BPLR 2472 (where the trustees, who had responsibility for considering and approving housing loans, had delegated this responsibility to an independent consultant, with adverse consequences; it was shown that the consultant had not acted in the members' best interests in the granting of housing loans and that the trustees acted ultra vires by their omission to take reasonable steps to protect members' interests); Shell Southern Africa Pension Fund v Sligo and Others [1999] 11 BPLR 235 (PFA) (holding that a dispute relating to a discretionary payment provided for in an instruction from the employer to a pension fund is not a dispute relating to interpretation and application of rules of the fund).

20 Mungal, para 10.

21 Footnote Ibid.

22 Old Mutual Life Assurance v The Pension Funds Adjudicator [2008] 2 BPLR 97 (D); Mungal and Another v Old Mutual [2010] 2 All SA 139 (SCA); 2010 (6) SA 98 (SCA); Mungal v Protektor Preservation Provident Fund and Another [2006] 2 BPLR 149 (PFA); and Freeman v South African Retirement Annuity Fund case no PFA/KZN/2799/05/KM (2006) (unreported).

23 N Jeram “Participating employers under scrutiny in disability claims” (2008) 29 Industrial Law Journal 51 at 51–57, discussing the practice by funds of re-insuring disability benefits and the jurisdictional problems associated with this.

24 Footnote Ibid.

25 Footnote Ibid.

26 For a discussion of this problem in the South African context, see Van der Linde v Telkom Retirement Fund [2004] 11 BPLR 6257 (Van der Linde); M Mhango “When should a pension fund require a member to undergo medical treatment as a condition for receiving permanent disability benefits? A critical review of the Pension Fund Adjudicator's determinations” (2007) 28 Industrial Law Journal 1472, discussing Van der Linde and the problems of re-insurance agreements. See det no D06/07\136 on total permanent disability decisions and trustees' fiduciary duties by the Superannuation Complaints Tribunal, describing this practice and the problems associated with it as undesirable in Australia (1 April 2007 – 30 June 2007) 48 Quarterly Bulletin 1 at 9–10.

27 See Van der Linde; Pienaar v Consol Group Pension Fund PFA/GA/97/98 (unreported), where a dispute concerning the failure of the employer to submit a disability claim with the fund on a member's behalf was deemed not to constitute a complaint; and Seethal v Metal and Engineering Industries Permanent Disability Scheme PFA/KZN/2719/01 (unreported), which held that a dispute concerning the repudiation of a permanent disability claim by a permanent disability scheme was not a complaint within the meaning of the PFA because the permanent disability scheme was not a pension fund organization.

28 See Hildebrand v Telkom Retirement Fund [2005] 5 BPLR 405; De Wet v Cargo Carriers Retirement Fund [2004] 5 BPLR 5682; and Leoschut v National Health Laboratory Services Retirement Fund PFA/WE/6720/2005/NVC (2007) (unreported).

29 See Robinson v Randfontein Estates Gold Mining Company Ltd 1921 AD 168, discussing the common law fiduciary duties of trustees.

30 This applies when contracting with service providers such as administrators. See Rhode v University of the Western Cape Provident Fund (1) [2001] 10 BPLR 2618.

31 Above at note 26.

32 Id, para 11.

33 Id, para 41. See also Jeram “Participating employers”, above at note 23 at 51–57, discussing the practice of funds re-insuring disability benefits and the jurisdictional problems associated with this, and Mhango “When should a pension fund require”, above at note 26, discussing Van der Linde and the problems of re-insurance agreements.

34 See det no D06/07\136, above at note 26.

35 Id, para 53.

36 Mungal, para 9.

37 Id, para 10.

38 Footnote Ibid.

39 Id, para 8.

40 See also Central Retirement Annuity Fund v Adjudicator of Pension Fund [2005] 8 BPLR 655 at 660, suggesting a focus on the substance of a complaint to determine compliance with the definition in the act, and rejecting a formalistic reading of a complaint.

41 See Sekele v Orion Money Purchase Pension Fund (2) [2001] 6 BPLR 2148; Seloane v Ledeen Provident Fund [2002] 2 BPLR 3107 (Seloane); and IBM South Africa Pension Fund v IBM South Africa (Pty) Ltd [2004] 9 BPLR 6061.

42 Seloane at 3113.

43 IBM South Africa Pension Fund, above at note 41 at para 12.

44 Mine Employees Pension Fund v Murphy 2004 11 BPLR 6204, pronouncing that the Adjudicator is constrained by the issues as pleaded in the complaint and that the Adjudicator's office does not give him any general power to investigate issues and or formulate issues for investigation of his own accord; Otis Pension Fund v Hinton [2005] 1 BPLR 17 (PFA), explaining (at 18) that “the intention of the legislature [regarding the PFA] was to constitute a complaints forum which would, for all practical purposes, be equivalent to a court of law but which was not bound by the formalities of procedure which might ordinarily have the effect of delaying adjudication and causing the parties to incur substantial expenses for legal representation”.

45 Central Retirement Annuity Fund v Adjudicator of Pension Fund [2005] 8 BPLR 655 (C).

46 Id at 660.

47 See S Khumalo “Jurisprudential role played by the Pension Funds Adjudicator in South African law” (paper presented at the Pension Lawyers Association, Cape Town, 5 March 2006) at 46–49, available at: <http://www.bowman.co.za/FileBrowser/ArticleDocuments/Pension-Funds-Adjudicator-Jurisprudential-Role.pdf> (last accessed 12 May 2013). This paper is critical of any rigid interpretation of the definition of a complaint and characterizes a broad construction as the “correct and sensible approach”, further arguing that a factory worker, who simply has a complaint that his or her pension is too small and files a complaint with the Adjudicator that the fund has not treated him or her fairly, should be able to have his or her complaint adjudicated by requiring the Adjudicator to look at the entire situation in relation to the fund to determine whether the worker received the benefit to which he was entitled under the PFA and the rules.

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