Retirement funds, which have delayed their surplus distribution arrangements because of a Sanlam staff fund court case that sought clarity on what constituted a "previous improper use" of a surplus, are getting into gear again following a recent change in legislation.
The Sanlam staff fund went to court last year and succeeded in getting the High Court to declare that any previous misuse of a retirement fund surplus by an employer prior to December 2001 was not affected by the pension fund surplus legislation.
As a result, amending legislation was promulgated last month making the Pension Funds Amendment Act on this issue retrospective to 1980.
An improper use includes using a surplus to pay additional pensions to a fund's pensioners in return for which they sacrifice medical scheme contribution subsidies from the employer.
However, numerous arguments were made in Parliament about whether the retrospectivity clause was, in fact, legal.
One of the main objectors was petroleum company Shell, which does not want to pay back about R200 million to its staff retirement fund.
There is no indication yet whether the new legislation will be challenged.
The Sanlam staff fund is now going ahead with a surplus distribution scheme.
Francois Marais, the chairman of the fund, says: "The trustees never had any desire to challenge the legislation and only required clarity on the duties. The trustees complied with the previous legislation based on the clarity provided by the court order, and shall now comply with the amended legislation".
André Zeeman, the chief actuary of Sanlam, says that the company is concerned about "about the retrospectivity of the legislation. However, no decision has been taken (by Sanlam) regarding possible future actions".
Graham Damant of legal company Bowman Gilfillan, which represents Shell, says that it is not the intention of his clients to bring a legal challenge to the new legislation "at this stage".
Tribunals
The Shell fund is one of 90 funds for which the Financial Services Board (FSB) has appointed a tribunal to take over the surplus fund distribution process from the fund trustees because it was not satisfied with the progress being made.
Jonathan Mort of the legal firm, Edward Nathan Sonnenberg, which is the legal adviser to the fund and the tribunal, says that the tribunal had been delayed by the Sanlam judgment and by a claim that there had been no improper use of a surplus, and any use of the surplus had been made following negotiation with the stakeholders.
The heavyweight tribunal, headed by senior counsel John Myburgh and supported by top lawyer Eduard Fagan and independent actuary Mickey Lowther, disagreed. Shell took the decision on appeal but then it abandoned the appeal.
Mort says the tribunal is now pressing ahead with finalising a distribution scheme.
Note: If you have any queries about any retirement fund surplus distribution scheme, you must ask the principal officer and/or the fund administrator of your fund for details in writing. If you do not receive the required information, you should lodge a complaint with the FSB (Telephone: 0860 324 766).
If you have any objection to a a distribution, you must first lodge your objections with the board of trustees of your retirement fund. If you are not satisfied with their response, take your complaint to the FSB.