The Pension Funds Adjudicator settled eight cases against retirement annuity (RA) funds this week, ruling against a Sanlam RA fund in four of these cases and in favour of the fund in one other.
In three of the cases, the parties agreed to a settlement and it was not necessary for Vuyani Ngalwana, the adjudicator, to make a formal ruling. The details of these cases have, therefore, not been released.
To date, Ngalwana has made a total of 31 rulings in cases involving RA funds.
In the four cases in which Ngalwana found against Sanlam's Central RA Fund, Ngalwana examined the rules of the fund and concluded that nothing in the rules or in the policy document authorised the deductions that had been made from members' savings. In all four cases, Ngalwana ordered the fund to recalculate the benefits as if no penalty fees had been imposed.
In Louw versus Central RA Fund and Sanlam, the member joined the fund at the age of 46 on August 1, 1990. He chose 66 as his retirement age. By November 2004, he had contributed R24 699.03. He then wanted to retire at age 60 (the rules allow for retirement between 55 and 70).
The fund informed him that his retirement value was R23 999.46 (less than his contributions after 14 years of membership), and that an early termination fee of R3 854.10 was imposed.
In Jonker versus Central RA Fund and Sanlam, the member had contributed a total of R16 819.48 by March 2004, when she stopped contributing to the fund.
The fund/insurer imposed a premium termination fee of R3 817.38.
In May 2004, the member was 55 years old and elected to receive a retirement benefit. However, as this was prior to the selected retirement age, an early termination fee of R526.27 was imposed.
The cases of Govender versus Central RA Fund and Sanlam and of Geduldt versus Central RA Fund and Sanlam related to the same issue. In both matters, the members had stopped contributing to the fund and a premium alteration fee of R5 614.37 (Geduldt) and R3 453 (Govender) was imposed as a result.
In Mgabisa versus Central RA Fund and Sanlam, the adjudicator found in favour of the fund, saying a member who receives a retirement benefit cannot receive more that one-third of the benefit in cash, and the balance must be used to purchase a pension for the rest of his life.
As the member may have been given improper advice, the matter was referred to Charles Pillai, the Ombud for Financial Services Providers.