The principles of equity, despite the equitable jurisdiction of the Pension Funds Adjudicator, cannot override the provisions of the Pension Funds Act (PFA) by permitting a fund to act in contravention of the PFA. The Financial Services Tribunal (Tribunal) has reaffirmed this position.
The applicant had been a municipal councillor since 5 August 2016 but only became a member of the Municipal Councillors Pension Fund (Fund) on 1 January 2017. On 9 May 2018 he instructed the municipality to cease contributions to the Fund and rather to contribute to a new fund which he had joined. The municipality complied with his instruction but the Fund did not find this acceptable because its rules precluded withdrawal while he remained a councillor. The municipality was obliged to pay contributions to the Fund. The applicant lodged a complaint with the Adjudicator without success, resulting in his application for reconsideration to the Tribunal.
The applicant submitted that the Adjudicator should have disregarded the contractual relationship between him and the Fund and exercise her equitable jurisdiction and permit him to withdraw from the Fund with repayment of his contributions. The Tribunal rejected this because principles of equity cannot trump any provision of the PFA. The rules of the Fund provide that a member cannot terminate membership while in service, and section 13 of the PFA records that the rules of a fund are binding. Ignoring the rules would be a contravention of section 13 of the PFA.
Additionally, the applicant alleged that he had been misled by the Fund, in that he had been advised that his contributions would be paid in equal parts by him and the municipality when in fact he paid the entire contribution, and this entitled him to cancel his membership. The Tribunal rejected this argument because his mistaken view was not caused by the Fund and it was not the duty of the Fund to explain or inform him of the details of the relationship between him and the municipality.
Finally the applicant advanced that the Adjudicator should not have ordered the municipality to comply with its statutory duty to pay the outstanding contributions with interest to the Fund because that was not his complaint. The Tribunal noted that the municipality had not sought to have this reconsidered and the determination of the Adjudicator did not add to the municipality’s statutory obligations.
The decision of the Tribunal emphasises the need for the Adjudicator to exercise equitable jurisdiction having regard to the applicable legislation as well as the need for employers to ensure that they are aware of the rules of a fund and do not act contrary to such rules.