You are in danger of losing your rights to any disputed benefits in your retirement fund if it is closed down and you don't take prompt action.
A claim against a retirement fund which is later liquidated (or shut down) could fall away if you do not notify the liquidator of the fund that you will be pursuing a claim against the fund.
And if you don't notify the liquidator of your intention, it will not help you to turn to the Pension Funds Adjudicator for help, because if you plan to involve the adjudicator, you also need to alert the liquidator of your intention of do so.
In a recent landmark determination by John Murphy, the adjudicator, it has emerged that where a fund is liquidated, or due to be liquidated, your rights may be severely curtailed simply because of lack of knowledge on your part, and even on the part of many attorneys.
Also, Murphy found that simply notifying the fund's liquidator of your plans to take up, or to continue with legal proceedings, is not enough - you have very little time to get your act together.
According to Murphy you have to:
- Notify the liquidator of the fund, within four weeks of the fund being liquidated, that you plan to take legal action or that you will be taking your problem to the Pension Funds Adjudicator; and
- Give the liquidator a minimum of three weeks notice in writing before continuing or commencing the proceedings.
Murphy came to this conclusion in dealing with a case in which a fund member, Nicolaas Heyns complained that the Saficon Boumat Pension Fund paid about R200 000 too little in retirement benefits to him, because the fund has based his period of service on 28 years instead of the 35 years that he had spent with the company.
The fund, however argued that during the earlier years of his service benefits accrued at a lower rate than during his later years of service and that the calculation of his benefit correctly took account of the lower accrual rates by adjusting his length of service.
No jurisdiction
But, Murphy was unable to investigate the merits of this issue because he found that, despite the fact that the complaint was lodged at his offices a month before the fund was placed in liquidation in January 2001 - he did not have jurisdiction over the matter.
Murphy concluded that under the Pension Funds Act, his rulings have the same effect as court orders if no appeal is lodged within six weeks.
In dealing with the liquidation of funds, the Pension Funds Act incorporates sections of the Companies Act. One of the implications of this is that if you want to institute or continue with legal proceedings against a fund that is placed under liquidation, you have to give the liquidator notice of your intention to do so within four weeks of the fund going into liquidation. If you don't, the complaint is deemed to be abandoned and neither the courts, nor the adjudicator, can hear the case.
"In arriving at this finding, I am aware of the hardship that may be created for E fund members E who will undoubtedly be unaware of the provision or its effect in curtailing their remedies," Murphy says.
"The intention in establishing the office of the adjudicator was to create a quick, consumer-friendly alternative to formal litigation. It is therefore ironic that the legislature permits complainants to be thwarted by a provision so obscure that it has been missed by many a professional practitioner.
"It is even more unfair in the particular circumstances of the adjudicator's office where, for historical reasons, there is a backlog in addressing complaints. This means that the merits of a complaint will not be examined in the mere four weeks that is allowed and the office will not be alerted to the possibility of a complaint expiring in time.
"In the meantime, E a fund member E rests falsely secure in the perception that once his complaint has been lodged here, it is not necessary for him to take any further steps, unaware of the peril in which a liquidation of the fund places his claim," Murphy says.
The answer perhaps is that funds, or the liquidator, should be obliged to make these facts known to fund members and the best way to do so would be for the Registrar of Pension Funds to send out a circular to this effect.
Murphy says he intends sending a copy of this ruling on the Heyns case to the Registrar of Pension Funds for further consideration.
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