An umbrella retirement fund that ignored an instruction by an employer group to transfer its savings to another fund has been ordered to pay more than R250 000 in lost returns to the group.
In a recent ruling, Muvhango Lukhaimane, the Pension Funds Adjudicator, also ordered the fund not to deduct the amount from members’ savings.
The adjudicator found that Speciality Metals, through its director Andrew Kilmartin, instructed the Corporate Selection Umbrella Retirement Fund to transfer the employer group’s savings to the Vitae Umbrella Provident Fund in June 2005. In July 2007 Speciality Metals decided to move its members again, to the FundsatWork Umbrella Fund, administered by Momentum. It then became aware that the transfer to the Vitae fund had not been effected.
Kilmartin then complained to the adjudicator that the Corporate Selection umbrella fund had failed to carry out the paperwork to effect the transfer.
Transfers between retirement funds have to be approved by the Registrar of Pension Funds, and funds have 180 days to lodge the required documentation with the registrar from the date of termination of participation and then 60 days to transfer the assets to the new fund.
The funds were eventually transferred in December 2009, the ruling says.
Kilmartin complained to the adjudicator that the failure to effect the transfer had resulted in the employer group losing R256 426 that it would have earned had the members’ savings been transferred and invested in the chosen portfolio in the Vitae fund.
In response to the complaint, the Corporate Selection umbrella fund, which is administered by Liberty, said the employer group could have chosen better-performing portfolios within its fund.
Lukhaimane found that no tenable reasons had been advanced by either the Corporate Selection Umbrella Fund or Liberty for the inordinate delay in effecting the transfer. She says the delay resulted in investment losses that “cannot be justified”.
Lukhaimane also criticised Liberty for its “cavalier responses” to her office. She ordered the fund to repay the employer group the returns they lost as a result of not being transferred as instructed, calculated from the June 2005 until October 2009, when the transfer was effected.