The naivety of NBFIRA is astonishing – Tribunal

Says BPOPF and AlexForbes have been “Tardy and Negligent” A Tribunal has concluded that the conduct of the Botswana Public Officers Pension Fund (BPOPF) and Alexander Forbes (now AlexForbes) is at best “tardy and negligent” in a matter in which a pensioner, Peggy Mmopele, was issued two contradictory statements which Mmopele says influenced her decision to retire from the public service. The Tribunal says it satisfied that the Fund has failed in its legal duty to communicate adequate and appropriate information to Mmopele. “In the result it has acted unlawfully,” it says. [ihc-hide-content ihc_mb_type="show" ihc_mb_who="1,2,3,4" ihc_mb_template="1" ] Court documents show that in January 2016, the Fund furnished Mmopele with a benefit statement that indicated her fund credit on 31 March 2016 to be sitting at P2,325,363.66. However, on 20 April 2016, AlexForbes furnished Mmopele with a benefit statement that had a fund credit of P4,401, 400.63 as at 31 March 2016. The Tribunal heard that when Mmopele queried these values since they were significantly contradictory of each other, she was met with an implausible explanation that the benefits shown on the Fund’s benefit statement were the true and accurate values while those of the fund administrator were incorrect. Mmopele asked the Tribunal to review the decision of the NBFIRA, the regulator (respondent), which confirmed the decision of BPOPF to pay her retirement benefits in accordance with the benefit statement issued by the Fund, disregarding the statement issued by the administrator that contradicted the Fund’s statement and had more than double the fund credit. Mmopele had told the court that her decision to retire was influenced by the latter’s fund credit. However, the Tribunal has found that the respondent (NBFIRA) was dismissive of her explanation as to why the Fund and the Fund Administrator issued two contradictory statements. “In the respondent’s view, the applicant has no one to blame but herself as all the benefits statements issued by the Fund have a note to the effect that ‘any errors in your personal details should be reported to the Employing Authority’,” says the Tribunal. “But that notwithstanding, so the Respondent’s argument runs, the Applicant decided to enquire from Alexander Forbes (the Fund Administrator) instead of the employing authority or the Fund itself.” Significantly, the Tribunal has found that the naivety of the respondent’s submission is astonishing and that personal details relate to matters within the applicant’s (Mmopele) personal knowledge. These include errors in relation to her date of birth, names, identity card number, and date of joining the membership. The Tribunal argues that the reason why such errors are to be reported to the employing authority is on the sole basis that the employer is the custodian of the employees’ personal details. “Mathematical or actuarial calculations of fund credit can never be classified as matters of personal knowledge/details,” it says. “Such calculations require a skilled and trained eye to compute and analyse. Therefore, the calculations cannot fall within members’ personal details.” The Tribubal cites Section 15 (1) (aa)- (cc) of the Retirement Funds Act, No. 27 of 2014 (RFA, 2014), which states that the board of a licensed fund is obligated to appoint and manage an administrator who shall maintain the membership records of the licensed fund; collect contributions on behalf of the licensed fund; and pay benefits. Furthermore, in terms of Section 15 (1) (b) of the RFA, 2014, the board of the licensed fund is required to ensure that adequate and appropriate information is communicated to stakeholders informing them of their rights, benefits and duties in terms of the rules, together with such matters as may be prescribed by the Regulatory Authority. Section 15 (2) of the RFA, 2014 goes further to provide that the service provider, in this case, the administrator, acts towards the licensed fund and its members as if it has a fiduciary responsibility. “It therefore cannot lie in the mouth of the respondent to attempt to blame the applicant for accepting the Fund Administrator's benefit statement as correct,” the Tribunal states, adding that it is a matter of law that the Fund Administrator has fiduciary responsibilities towards members on behalf of the Fund. “There is a clear responsibility in terms of Section 15 (1) (d) requiring that adequate and appropriate information must be communicated to members in respect of their rights, duties and benefits,” says the Tribunal. “The members are not expected to pick and choose and treat benefit statements issued by Fund Administrators as more unreliable and unauthentic than benefit statements issued by the Funds themselves.” The benefit statement from the Fund Administrator states: Online Updates Withdrawal Calculation as at Exit Date 31 03 2016. The Tribunal says there is no ambiguity in this heading, its plain meaning being that the amounts reflected on the statements will be paid out to the member in the event such member retires on 31 March 2016. “There is no explanation on the statement cautioning the reader that the values reflected thereon are mere illustrative values, or are based on the retirement benefit as at the projected normal retirement date, as opposed to the early retirement that the applicant opted for,” says the Tribunal. Given that both benefit statements had no explanation cautioning the applicant that the values reflected thereon were estimates and unverified, and even assuming that the Fund’s explanation that the Fund Administrator’s benefit statement was erroneous was held to be valid, the Tribunal says, it does not negate the fact that the retirement values shown on the benefits statements as at 1 January 2016 and 20 April 2016 painting a picture of the fund credit as at 31 March 2016 were contradictory and are a misstatement of the correct position. The Tribunal notes that a Fund Administrator is required to act in the best interests of members at all times. The failure to perform this duty constitutes maladministration of the fund. The Tribunal emphasises that it is beyond debate that a relationship existed between the applicant and the Fund Administrator when she sought and received its retirement benefits advice. At the time, the relationship was such that the applicant could reasonably be expected to trust the accuracy of the pension information provided by the Fund Administrator in the same way she was to trust that of the Fund. The Tribunal points out that one of the core functions of the Fund Administrator in terms of the RFA, 2014, was precisely the provision to inquiring fund members of general and specific information about their pensions. It says the Fund Administrator held itself out as having knowledge and expertise required to provide accurate pension information and it provided that information with the tacit understanding that the members could, without any inquiry or research, rely on it to plan their future. “That is precisely what the Applicant was expected to do and indeed did,” says the Tribunal, adding that in the circumstances, the law did not obligate her to consider whether the Fund Administrator's advice conformed to the Act or the Fund (as the Fund Administrator was the fiduciary of the Fund itself). “The Respondent’s submission that the applicant ought to have been cognisant of the Act and, therefore known that the Fund Administrator’s calculation of her pension was erroneous, negates the Fund Administrator’s very purpose and is unrealistic and it must fail,” says the Tribunal. However Mmopele was not awarded damages as Tribunal concluded that she received what she and the employer contributed hence did not suffer losses. [/ihc-hide-content]

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The naivety of NBFIRA is astonishing – Tribunal

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