Can I get my pension benefits if there is a shortage that I was never told about or given proof of?

The long answer

First, just to clarify: 

The Pension Funds Adjudicator does not have jurisdiction over funds to which the State contributes financially, for example, the Government Employees Pension Fund (GEPF), the Social Assistance Pension Scheme and Associated Institutions Pension Fund (AIPF), as these are not required to register under the Pension Funds Act (PFA). They are the only funds which are not required to register under the Pension Funds Act.

But the clauses in the PFA that deal with what a company is allowed to do when it is owed money by an employee also apply to these other funds: The GEPF, for example, says it can deduct “the amount of any loss which has been sustained by the employer through theft, fraud, negligence or any misconduct on the part of any member, pensioner or beneficiary which has been admitted by such member or pensioner in writing or has been proved in a court of law”.

Similarly, s 37D(b)(ii) of the Pensions Fund Act says that a fund may deduct from the member’s benefits any amount in respect of damages caused to the employer by the member as a result of theft, fraud, dishonesty or misconduct, provided that:

1. the member has admitted liability in writing, or

2. judgment by a court of law has been obtained against the member.

This is why the employer wants you to sign an AOD. An AOD or AOL (which is an admission of debt and liability) must include a detailed description of how the loss or shortage occurred, and an agreement on the amount to be deducted and paid to the employer. 

In the 2009 Supreme Court Case of Highveld Steel and Vanadium Corporation Ltd v Oosthuize, the court found that trustees of a pension fund are not entitled to make any deduction in the absence of a written admission of liability by the member concerned or a judgment obtained by the employer against the member.

The Magistrate’s Courts Act 32 of 1944 says that apart from the amount that must be paid in an instalment to the employer, the AOD should include details of the debtor’s monthly or weekly income and expenditure, as well as the amounts needed for necessary expenses of the debtor and those dependent on the debtor. So that the court can decide if granting the order would, in the circumstances, be “grossly disproportionate.”  In other words, unreasonable and unjust.  

If the AOD makes provision for deferred payment of a debt, which is a payment plan, this is subject to the National Credit Act (NCA). If the NCA applies and the credit provider has failed to register as a credit provider, the AOD is unlawful. 

Zamazulu Nkubungu, in a 2015 article for the law journal De Rebus, said that such an admission (AOD) must be made freely and voluntarily and without any undue pressure on the employee. Also, that the employer must ensure that the employee understands the consequences of their admissions. 

If an employee can prove that they were unduly pressured (that is, threatened and intimidated) into making an AOD, it will not hold up in court. So it’s important to record everything that was said and done, including names and dates. 

The judgment by a court of law must either be 

1. after a civil action has been instituted and a judgement made awarding damages to the employer as compensation for the financial loss suffered, or

2. a compensatory order has been made by a criminal court in terms of s 300 of the Criminal Procedure Act 51 of 1977, specifically allowing compensation to the employer for the financial loss suffered.

Cliffe Dekker Hofmeyr (CDH) Attorneys described a court case from 6 February 2023 that dealt with whether the trustees of a pension fund can be ordered to withhold pension benefits, when there is an allegation of a member’s owing an employer for damages caused by theft, fraud or dishonesty.  

The court found that while Section 37D of the PFA provides for a retirement fund to deduct any amount due by the member to an employer for damages suffered by the employer arising from the employee’s wrongdoing, this provision only applied to an employer who was able to prove that the damages arose from the employee’s conduct.

The court found in favour of the employer in that case, and that a board of trustees must withhold an employee’s benefits once it had assessed that the employer had a case that was likely to succeed in court. 

CDH Attorneys emphasised that when an employer makes an application to the pension fund for the deduction of the employee’s benefit, based on allegations of theft, fraud or misconduct, the burden of proof rests on the employer to show that the claim is valid, which was done in the 6 February 2023 case.

They went on to say that if the employee was able to demonstrate serious doubt about the amount claimed for the damages, the amount that the court may order to be withheld should be reduced accordingly.

I have gone into some detail about the case so that you know what you might be dealing with and can prepare your own case. 

Also, just to say that although the GEPF is not registered with the Pensions Fund Adjudicator, if you were a member of the GEPF, it appointed a Government Employees Ombud (GEPO) in 2019. The GEPO says that “The purpose of the Office of the Government Employees Pension Ombudsman is to establish a mechanism for members of the Government Employees Pension Fund and the participating employers to lodge complaints against the fund and for GEPO to provide investigate, consider, determine and resolve the complaints.” In other words, to find an internal dispute remedy rather than going to court.

These are the Ombud’s contact details:

Located in: Department of Communications and Digital Technologies

Address: 1166 Park St, Hatfield, Pretoria, 0028

Hours: Closes 4:30 pm

Phone: 012 110 4950

Email: enquiries@gepo.co.za

I think you should make a detailed sworn affidavit about everything that happened, starting with the first shortage which you paid, including dates and amounts, and the final warning you were given at the disciplinary hearing. Then about the claim of a second shortage which you deny and of which the company has given no proof, in spite of your asking for proof. Include as much detail as possible.

Take this affidavit to Legal Aid and ask for legal assistance. Legal Aid is a means-tested organisation that must assist people who can’t afford a lawyer. If they think you have a case, they can take it to court.

These are their contact details:

Tel: 0800 110 110 (Monday to Friday 7AM - 7PM)

(Please Call Me): 079 835 7179 (Please Call Me) 
Email: communications2@legal-aid.co.za

You could also ask the Black Sash for free paralegal advice. These are their contact details:

Email: help@blacksash.org.za

Helpline: 072 66 33 73, 072 633 3739 or 063 610 1865.

Wishing you the best,
Athalie