Graduate holds forth on pension fund laws

15 May 2006

Vuyani Ngalwana, a neat, youthful and trendy figure, is no grey corporate lackey.

With his academic record (BA LLB, 1992; PGDip Income Tax Law, 1995; Master of Laws in income tax, 1996, all from UCT), coupled with his formidable energy and desire to fight for the underdog, Ngalwana is poised to take on any organisation that fails to comply with South Africa's pension funds law.

Ngalwana, who has been the country's Pension Funds Adjudicator since March 2004, started his speech to the Alumni Leadership Forum on April 20 by slamming the media for its unfair and uninformed reporting on what they termed his "over-zealous" pension fund reforms.

He then described the activities of his essentially one-man-band-with-a-few-deputies operation that he feels affects the turnaround time (currently at six months per case) and quality of cases put forward (currently up to 350 cases per deputy). What slows down the process as well is that the buck only stops at the PFA's desk because Ngalwana oversees each and every case that comes to his organisation.

He laments this loss of public confidence because of a lack of resources, he said, and hopes to amend the Pension Funds Act in order to provide for a panel of adjudicators. This is just one of many changes to the law that Ngalwana would like to expedite. Others include the possibility of publishing his findings and judgements in law reviews and making penalties for pension funds more punitive.

In his speech, he likened himself to Rousseau's physician in The Social Contract who has to examine and cure the pusillanimous pension funds industry in South Africa as they resist reform.

"I wish to address you on just five of the many 'evils' that the industry cannot bear to see 'touched', and trembles at the sight of a physician that is the regulator armed with long-overdue regulation," he said. "Some have argued, unconvincingly, that reform in the industry is a dangerous and fruitless enterprise.

"They say it is dangerous because life companies will simply 'divest themselves of [the retirement fund] line of business'. Then follows an ominous rhetorical question, 'Where will that leave us?' My facetious answer to that is - 'Perhaps better off'."

Ngalwana went on to illustrate some "industry evils" with summaries and anecdotes of cases while giving details of issues around (1) lapsing of premiums leading to a reduction in benefits and payouts (2) the complexities of illustrative or projected values for policies and (3) anti-competitive practices in the pension funds industry, particularly relating to transfers from one retirement annuity fund to another.

Ngalwana electrified the atmosphere as he quoted the law by heart. The audience was enlightened by his words that "the retirement industry has been in virtual autopilot mode for far too long". But, he said, he feels that he is well on his way to restoring to good health those pension funds and retirement annuity providers that hoodwink unsuspecting consumers with their unfair, prejudiced and illegal practices.

Over 200 alumni attended the talk, including 70 actuarial science students. Ngalwana's talk at forum was introduced by UCT's deputy vice-chancellor for student affairs, Professor Thandabantu Nhlapo.

Catherine WynSculley

Creative Commons License This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.

Please view the republishing articles page for more information.