The governance of retirement funds in South Africa is undergoing a significant shift, driven in part by the anticipated enactment of the Conduct of Financial Institutions (COFI) Bill. COFI seeks to introduce a consolidated, principles based regulatory framework that places customer outcomes, fairness and accountability at the centre of financial sector conduct.
One of the key features of COFI is the emphasis on effective complaints management. Historically, complaints within retirement funds have often been treated as operational irritants, which were handled in a fragmented, reactive manner, with limited integration into broader governance and risk management systems.
This resulted in many complaints that could have easily been resolved at retirement fund or administrator level being unnecessarily escalated to the office of the Pension Funds Adjudicator (OPFA). This problem is exacerbated by factors such as increased member rights awareness, increased public awareness of the existence of the Pension Funds Adjudicator and the two-pot system, all conspiring to drive an influx in the number of complaints lodged with the Pension Funds Adjudicator. In fact, the financial year ended 31 March 2026 saw a record number of complaints being lodged with the OPFA.
Against this background, for many years the OPFA has advocated for effective complaints handling by retirement funds and administrators as key to preventing unnecessary escalation of complaints to the office. The advent of COFI promises to position complaints management as a key indicator of good governance which, if utilised properly, could help minimise unnecessary escalation of complaints.
At the heart of the COFI framework is the principle of treating customers fairly (TCF), which requires financial institutions, including retirement funds, to deliver outcomes that are demonstrably fair and appropriate. Complaints management is a critical mechanism through which these outcomes are tested and accountability embedded. A well-functioning complaints system provides real time insights into whether members are being treated fairly, whether retirement fund products are fit-for-purpose and perform in line with promises made to members, whether communications are clear, and whether benefits are administered correctly.
In this sense, complaints are not merely retrospective grievances, but forward looking indicators of conduct risk. These provide trustees with valuable insights into operational performance, member experience and emerging risks, all crucial metrices in the sound governance of a retirement fund. When leveraged appropriately, these can enhance governance standards, improve member experience and ultimately minimise the unnecessary escalation of complaints to the Pension Funds Adjudicator. Put simply, effective complaints management is the undergird for the fair treatment of retirement funds members.
As retirement funds prepare for the implementation of COFI, a critical re-evaluation of their complaints management approaches and systems will be non-negotiable. Retirement funds will need to ensure that their complaints management system are at the very least:
- Accessible – members and beneficiaries should know where and how to complain, and the process should be user friendly and free of unnecessary barriers. Lack of access to internal complaints management systems could result in disputes that could be resolved at fund level being unnecessarily escalated to the Pension Funds Adjudicator;
- Timely – the lifecycle of a complaint, once lodged, should be clear to a complainant, and not unnecessarily long. Delays in resolving complaints could erode a member’s trust in the system and result in escalation of a complaint that could easily have been resolved at fund level; and
- Transparent – responses to complaints should be clear and reasoned, providing assurance to the member that their complaint has been properly and fairly considered. Unclear responses may result in disputes arising from misunderstandings and being unnecessarily escalated.
Effective complaints management under the COFI regime can materially reduce the burden on the Pension Funds Adjudicator. When internal complaints management processes are credible, fair and efficient, there may be a reduction in members seeking external intervention from the Pension Funds Adjudicator. This shortens resolution times for members, improves member satisfaction and enhances overall confidence in the retirement fund ecosystem. This is even more crucial in present times when the Pension Funds Adjudicator faces an influx of complaints, if the financial year ended 31 March 2026 is anything to go by.