If your retirement fund offers you a choice of investment portfolios, you should take great care to understand the risks associated with the portfolio you choose.
Jennifer Hill of Durban North recently complained to Elmarie de la Rey, the Acting Pension Funds Adjudicator, that the MM Pension Preservation Fund and its administrator, Momentum Group, had “misrepresented the security and credibility of the fund when she joined it”.
In November 2000, Hill transferred R54 949 from her previous pension fund, the Naspers Retirement Fund, to the MM Pension Preservation Fund. She selected a retirement date of November 2008.
Hill chose to invest her savings in a linked investment portfolio, the Equity International Portfolio, managed by the Momentum Group.
In 2002, Hill received a benefit statement that showed that her fund value was R57 558. The statement said if her investment grew by six percent a year until maturity, she would receive R85 213 on maturity. If the investment grew by 12 percent a year until maturity, she would receive R120 766 on maturity.
In 2003, Hill received a statement that reflected a fund value of R34 137. It stated that if the investment grew at five percent a year until maturity, she would receive R41 522 on maturity, and if the investment grew at 10 percent a year, she would receive R54 985 on maturity.
In its response to De la Rey, the Momentum Group said that an independent financial adviser had assisted Hill when she joined the MM Pension Preservation Fund and she had chosen to invest in the Equity International Portfolio.
The Momentum Group also said that Hill was told her fund value would fluctuate according to the performance of her chosen investment portfolio.
The policy document Hill received when she joined the MM Pension Preservation Fund confirmed that there were no investment guarantees, and all her annual benefit statements reiterated that the value of her policy depended on market performance, Momentum said.
De la Rey dismissed Hill’s complaint, saying that Hill had freely chosen her investment portfolio and could not hold the fund and its administrator liable for either her investment choice or poor advice given to her by an independent financial adviser.
CONTACT
The Acting Pension Funds Adjudicator is Dr Elmarie de la Rey.
Telephone: 087 942
Fax: 087 942 2644