LIKWANE BENEFICIARY FUND MATTERS: OVER 100 PARENTS TAKE NINE PENSION FUNDS TO COURT

MBABANE – Over 100 parents have taken nine pension funds to court, to compel them to avail funds for their immediate needs until Likhwane Beneficiary Fund resumes normal operations.

The pension funds are PSI Provident Fund, Eswatini Electricity Company Pension Fund, UNESWA Pension Fund, Eswatini Building Society Pension Fund, Raleigh Fitkin Memorial (RFM) Pension Fund, and Eswatini Civil Aviation Authority Pension Fund. Others are Royal Eswatini Airways Pension Fund, Eswatini National Provident Fund Pension Fund and Premier Swazi Pension Fund (Pty) Ltd. Other respondents in the matter are administrators of the provident/pension funds, Likhwane Beneficiary Fund and the Financial Services Regulatory Authority (FSRA).

Benefit

The funds are established by different employers for the benefit of their employees. The employer and employees enter into an agreement in terms of which the former would deduct monthly sums from the latter.  The employer adds a certain amount to that which has been deducted from the employee. The money would then be remitted to the pension fund or fund administrators. When the employee dies, the employer calls the beneficiaries to advise them about how much the employee each of them would receive from the member’s provident fund.

In the same meeting, the beneficiaries would be advised that a trust fund must be established with Likhwane Beneficiary Fund for the benefit of minor dependants and that the benefits be paid into the trust fund until they reached the age of 21 years.  The parents are appointed as the legal guardians for the members’ minor children.  The aim of the trust fund established by Likhwane is to, among other things, look after the children’s financial interest until they come of age, ensure they are sustained and educated until they are grown and the trust fund would invest the money and make monthly payments (stipend) to the legal guardians and caregivers to help the children’s general living conditions.

Large amounts are paid out separately for expenses such as school fees and medical costs. According to the parents, they and/or guardians were informed that they would be required to submit any request for educational expenses, medical or maintenance needs, including supporting documentation to Likhwane Beneficiary Services.

They submitted that this was happening without hindrance until August 2023 and/or September 2023, wherein the beneficiaries were unable to apply to Likhwane and get assistance as had been the norm. Likhwane invested E63 million of the money it received from the various pension funds in Escponent Eswatini, which is now known as ESW Investment Group. Investments of over E340 million by about 1 400 emaSwati were lost at Escponent and to date the money has not been recovered.

Beneficiaries

In their urgent application, the over 100 parents want the court to order the pension funds to pay them or the beneficiaries any amounts which may be available and outstanding from the pension fund or fund administrator, which may be due to them or the beneficiaries, held by the pension funds.
They also want the pension funds, including the fund administrators, to remit directly to them or the beneficiaries whatever amount is still available in their respective funds due to them and from the insurance amount provided for such monies remitted to Likhwane.

Alternatively, the parents are seeking an order that the pension funds make available funds for their immediate needs, Likhwane resumed operations.
Likhwane closed its offices at The New Mall in Mbabane, after FSRA filed a notice to appeal the judgment dismissing the latter’s application to liquidate the beneficiary fund (Likhwane).

According to Carol Scholman, who is the first applicant, the nature of court application is to get the court to come to the assistance of the parents and/or beneficiaries, as the case may be. She said the parents had suffered immensely, following the closure of Likhwane’s office. She told the court that sometime around August and/or September 2023, Likhwane closed its offices and the word around town was that this was due to the FSRA, ‘which discovered some shenanigans in its operations and thereafter directed the 11th respondent (Likhwane) to cease and desist from taking on new business, in a bid to protect the applicants and the pension funds’.

Scholman submitted that she visited the offices of Likhwane and found them closed, with a notice on the door, communicating that operations had been suspended and any inconvenience caused was regretted.

Closure

“I was then taken aback by such information, as nothing had prepared us for the imminent closure of the 11th respondent. I must hasten to mention that, from the 11th respondent on the normal scheme of things, when there is a need, we would approach the 11th respondent for issues such as school fees, school uniform, transport money, medical needs, toiletries and any other relevant needs for the beneficiaries, who in most cases are minor children and school-going,” Scholman submitted.

The veracity of these allegations is still to be tested in court. The respondents are yet to file their answering papers. The parents are represented by Mxolisi Dlamini of Dynasty Inc Attorneys. Scholman argued that following the closure of Likhwane offices, the beneficiaries were being sent from pillar to post, without any assistance. This matter, according to Scholman, was widely reported in the local print media, where parents were leaving their children with the respective pension funds.

“Again, while all this was happening, the 11th respondent under case No.1921/2023 approached the High Court, challenging its closure by the 12th   respondent (FSRA) and that the 12th respondent had closed its account.  “The 12th respondent has denied closing the 11th respondent and/or freezing its accounts. With all this happening, the applicants and/or beneficiaries have been left without any remedy as they cannot receive any funds from the 11th respondent and now have been left without any recourse as they cannot get any assistance from the 11th respondent,” Scholman added. She mentioned that it was apparent that Likhwane would not be able to meet any of its obligations for a while.

She said, in fact, on November 9, 2023, Likhwane issued a notice, which was displayed on its door that; ‘Regrettably, Likhwane Offices will be closed while we seek guidance on a way forward’. “It is apparent that the beneficiaries will not be able to access the benefits that they had been receiving from Likhwane. It is common cause that most of the beneficiaries are school-going and need the money for the payment of school fees, as it is the critical time of the year, where exams are being done.”

Scholman argued that the beneficiaries were now in limbo, in respect to the payment of their school fees as most schools had policies that pupils who had not paid school fees in full, would not be allowed to sit their exams. The matter is pending in court.

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