The date you leave a retirement fund is the date according to which your withdrawal benefit must be calculated – not the later date when the payment is made to you.
The acting Pension Funds Adjudicator (PFA), Dr Elmarie de la Rey, recently admonished a fund and its consulting employee benefits company for calculating a benefit using the wrong date. In her ruling, De la Rey ordered GG Umbrella Pension Fund and its consultant, Garrun Group Employee Benefits, to pay a member the difference between what it had already paid out and the withdrawal benefit as it stood at the time of the withdrawal notification.
When she received her withdrawal benefit in May 2009, Janet Fuller of Parklands in Cape Town was paid out about R69 000 less than she thought she would get. She complained to the PFA because she was not happy with the amount she received.
Fuller resigned in September 2007. Her fund credit was then R310 856.
In April 2008, she requested a withdrawal and transfer of her funds to a Liberty living annuity.
She was repeatedly told by the GG Umbrella Pension fund that her benefit could not be paid immediately because the fund was being audited and it was awaiting approval from the South African Revenue Service for her benefit. The fund also told her that only 75 percent of the benefit would be transferred to Liberty and the balance would be paid once the audit process was completed.
Fuller was eventually paid a benefit of R269 070 on May 27, 2009.
According to Garrun Group Employee Benefits, the GG Umbrella Pension fund had changed administrators and in the process some member information had not been transferred and this had necessitated the audit.
The fund told De la Rey there had been a fall in investment returns of 15.92 percent between April 2008 and November 2008, which was consistent with the fall in the financial markets over the period.
The fund also said that, in terms of its rules, the trustees shall, within a reasonable period from the date on which they are notified of a termination of membership, arrange for the transfer of the member’s fund credit to a bank account. However, the fund told De la Rey that the disinvestment could not take place before the clean-up of the data because it was not possible for Fuller’s fund credit to be calculated accurately.
In her determination, De la Rey says Fuller became entitled to her withdrawal benefit when she resigned on September 4, 2007, and at the end of that month her fund balance was R310 856.
“The law is clear that a member’s withdrawal interest equals his or her fund credit on his or her withdrawal date. While the date of payment of the benefit may differ from the accrual date, the amount payable is the withdrawal interest on the date the benefit accrued to the member,” De la Rey says.
Fuller’s withdrawal benefit should have been calculated on September 4, 2007, the date on which she became entitled to her fund credit, she says.
De la Rey ordered that, within seven days of the ruling, the Garrun Group Umbrella Pension Fund and Garrun Group Employee Benefits calculate Fuller’s withdrawal benefit as it stood on September 4, 2007. She also ordered them, within two weeks of the ruling, to pay Fuller the difference between what they had already paid her and what they should have paid her.
* For complaints relating to retirement funds, contact De la Rey’s office on 087 942 2700, fax to 087 942 2644, or email enquiries-jhb @pfa.org.za