Cape Town – Pension Funds Adjudicator (PFA) Muvhango Lukhaimane has lashed out at a provident fund for causing ‘disharmony in the industry’.
Lukhaimane, was scathing in light of how Chemical Industries National Provident Fund (CINPPF) conducted its business in trying to get members of a rival fund on its books.
“It is the view of this Tribunal that the behaviour of the second complainant (CINPPF) constitutes an undesirable business practice that has the effect of causing disharmony in the industry and endanger its integrity if not sanctioned,” Lukhaimane said in a statement.
Sixty-eight employees of Packaging company Mpact Corrugated lodged a complaint that PPWAWU National Provident Fund refused to transfer their fund to CINPPF which, in their view, offered better benefits and performed better.
Interference
In its response, PPWAWU argued that “as part of their conditions of employment, the complainants were obliged to become members of a retirement fund organisation.
"They were given an option to join one of the three such organisations namely, the Mondi Mpact Group Fund, SATU Provident Fund or PPWAWU National Provident Fund”.
According to PPWAWU the Chemical Industries National Provident Fund did not have the authority to interfere with the contractual arrangements between the employer and the employees.
And a decision to transfer the employees’ funds to it would cause interference, as it would result in a breach of the conditions of employment.
PPWAWU also said that a petition submitted by the employees had been signed by 54 members and represented a small proportion of its 555 members.
Ruling
Lukhaimane ruled that once members in a plant felt that they wished to transfer out of the PPWAWU National Provident Fund, they may do so, but only to any approved provident fund.
“The primary issue which needs to be determined in the context of the present matter is whether or not the complainants are free to join any pension fund of their choice, which falls outside of the scope mentioned in their contracts of employment.
“It is imperative to note that an employment contract is a foundation which gives rise to fund membership. Minus a contract of employment, no fund membership exists.
“This Tribunal notes that the third respondent has a contingent of 555 employees and thus, from a proper employee management point of view, it was necessary for it to limit the number of pension funds to which it participates as failure to do so would have led to an administrative nightmare with each of its employees belonging to different pension funds.
“It is against this background that this Tribunal concludes that it favours a more purposive and practicable interpretation that the complainants’ rights to transfer out of the first respondent are limited only to the funds mentioned in their employment contracts,” she said.