In three recent rulings from Vuyani Ngalwana, the Pension Funds Adjudicator, two fund members won their cases but a third lost his.
J B van Lill v Investec Preservation Pension Plan and Investec Management Services
Van Lill was whacked with a tax bill of almost R80 000 and tried to pin the blame on his retirement fund.
Van Lill resigned from his job on December 31, 1995, and transferred his retirement money to the Investec Preservation Pension Plan which is administered by Investec Management Services (IMS). He did not work for the next two years.
On February 25, 1998 he withdrew his entire investment. As a result of this withdrawal, in 2003 the South African Revenue Service asked that Van Lill pay R76 362 in outstanding tax plus interest.
He was liable for additional tax because the payment from the preservation fund took place in the 1998/1999 tax year, when his income was significantly higher, as opposed to the 1997/1998, when his income for the preceding two years had been low because he had been unemployed.
Van Lill claimed that he had to pay more tax because IMS failed to implement his instructions timeously.
The adjudicator found that Van Lill had filled in the withdrawal date as March 2, 1998 in the withdrawal notification form. In terms of the rules of the fund, this is the date on which the benefit accrues to a member. Neither the fund nor IMS can be held responsible for the additional tax the complainant had to pay to SARS,
Ngalwana says.
Lionel Cupido v Marmoran and Sage Provident Umbrella Fund
Marmoran, a participating employer in the Sage Provident Fund, failed to enrol Lionel Cupido with the fund and to make contributions to the fund on his behalf when he joined the company in January 2004.
The adjudicator found that the fund's rules compel each employee to be a member of the fund and these rules specified that the employer is responsible for contributions to the fund at a rate of 15 percent of each member's pensionable salary.
The employer's failure to comply with the rules could have had disastrous consequences for Cupido and/or his beneficiaries had he resigned or been incapacitated or killed while working, Ngalwana says.
The fund was ordered to calculate the value of Cupido's current fund credit as if all contributions had been made, to pay this amount to the fund and to continue making contributions to the fund until Cupido's membership came to an end. An employer owes its employees a duty of good faith in relation to the employee's pension rights, Ngalwana says.
Pheello Nakalebe v South African Retirement Annuity Fund (Saraf), administered by Old Mutual
Nakalebe was approached by an Old Mutual intermediary, who offered to help invest his retrenchment package of R50 000. Nakalebe told the intermediary that he needed regular and unrestricted access to his money.
A month after the investment was made, when Nakalebe received the investment contract and the related documents, he realised that he could not access his funds before reaching the age of 55, or unless he became permanently disabled or died.
Ngalwana ruled that the retirement annuity be cancelled on the basis that no contract had come into being between Nakalebe and Saraf because Nakalebe had been mistakenly induced to enter into the contract.
Ngalwana ordered Saraf to refund the R50 000 to Nakalebe's former fund and that Nakalebe re-exercise his choice of payment of that benefit.
- Pension Funds Adjudicator's contact details: Telephone, Johannesburg (011) 884 1144; Cape Town (021) 674 0209. Website: www.pfa.org.za