“The Benefit Was Too Small to Trace” – The Adjudicator Says That’s Not Good Enough
A pension fund administrator received a transfer value of R1,069.51 for a member in 2018. It never traced the member to pay it out. When challenged, the administrator’s defence was straightforward: the cost of tracing would have exceeded the benefit. The Pension Funds Adjudicator rejected that argument.
What happened
In a February 2026 determination involving Tennant Life Benefits (Pty) Ltd (“Tennant”), administrator of the Fidelity Guards Retirement Fund (“FGRF”), Deputy Adjudicator Naheem Essop considered a complaint by a former member of the fund. The member had been employed by Fidelity Services Group from 1998 to 2024. He was initially registered with the FGRF before his employer joined the Private Security Sector Provident Fund (PSSPF) in 2002.
When the member eventually left employment and claimed his benefits in 2025, he received R137,614.48 from PSSPF. But there was still a transfer value of R1,069.51 sitting with Tennant, dating back to March 2018. Tennant had never traced the member to inform him of the benefit or facilitate payment.
The determination also recorded employer contribution arrears of R4,057.11 and late payment interest of R137,784.31, raising a separate section 13A compliance issue under the Pension Funds Act 24 of 1956 (“PFA”).
The Adjudicator’s reasoning
The Adjudicator’s reasoning was clear. Under the fund’s own rules (rule 27.1.3), the board has a legal duty to take all reasonable steps to trace members or beneficiaries rather than waiting for them to come forward. Separately, administrators owe a fiduciary duty to act in the best interests of members, which includes ensuring that benefits are preserved and accessible.
Tennant argued that tracing the member would have cost more than the R1,069.51 benefit. The Adjudicator found that this submission was contradicted by Tennant’s own acknowledgement that a tracing method costing only R30.00 was available but was not employed. Fiduciary obligations do not come with a minimum threshold. A member’s right to their benefit does not diminish because the amount is small.
The Adjudicator found that Tennant had failed to use appropriate methods to locate the member. The member was prejudiced, he was unaware the benefit existed, and his benefit was depleted by administrative costs while it sat unclaimed.
The determination also emphasised that contribution non-compliance under section 13A of the PFA must be actively addressed. Section 13A places the primary contribution obligation on the employer, but the fund’s monitoring and enforcement responsibilities, including those of the principal officer and administrator, are part of the statutory framework. The determination treated the failure to pursue the employer’s arrears as part of a broader pattern of administrative neglect.
Why this matters for trustees
This determination sends a direct message to fund administrators and the boards that oversee them.
Cost-based justifications for not tracing members will not hold up. Administrators cannot decide that a benefit is too small to warrant the effort of finding its owner particularly where low-cost tracing methods exist and are not used. Administrators who adopt internal thresholds below which they do not bother tracing are exposed to adverse findings.
Trustees need to actively oversee their administrators’ tracing efforts. The determination makes clear that boards should be receiving regular reporting on untraced members and unclaimed benefits. If your administrator is not reporting this to you, that is itself a governance gap worth addressing.
Contribution arrears under section 13A require active follow-up. The arrears and late payment interest in this case were substantial the interest alone exceeded R137,000 on original arrears of approximately R4,000. Where administrators fail to monitor and pursue employer non-compliance, members bear the financial consequences, and the fund is exposed to regulatory and complaint risk.
The principle applies beyond small benefits. While this case involved a modest amount, the reasoning extends to any situation where an administrator has not taken reasonable steps to connect a member with their benefit. The size of the benefit is irrelevant to the existence of the duty.
What trustees should do
Review your administrator’s tracing policy. Ask for data on how many members remain untraced, the total value of unclaimed benefits, and what methods are being used. If the answer is that tracing is only done when the member contacts the fund, that is not enough the Adjudicator has now said so in terms.
Check whether your administrator is monitoring and pursuing employer contribution arrears under section 13A. If arrears exist and no action has been taken, the fund and its members bear the financial consequences.
How Spencer West can assist
Spencer West advises pension funds, boards of trustees, employers and administrators on pension fund law, governance, regulatory compliance and fund-related disputes. We assist with trustee governance, death benefit distributions, section 13A compliance, fund rule interpretation, complaints before the Pension Funds Adjudicator and related litigation and Tribunal proceedings.
