You are entitled to the money in your retirement fund as calculated on the day of your retirement, according to a recent ruling by the Pension Funds Adjudicator.
Willem Eckhardt of Parkwood, Johannesburg, complained to the acting Pension Funds Adjudicator, Elmarie de la Rey, that the South Bakels Pension Fund and its administrator, Alexander Forbes Financial Services, had not calculated his retirement benefit correctly and had paid him less than he should have received.
Eckhardt joined the fund in December 1984 and retired on May 31, 2008 at the age of 65.
His accumulated retirement fund benefit on May 31, 2008 was R2.1 million, but Eckhardt was paid out only in March 2009. By that time his benefit had decreased due to a drop in the markets following the credit crisis and he was paid out only R1.9 million.
Eckhardt complained that his accumulated savings should have been disinvested on May 31, 2008 and moved to a money market fund. He said that if this had happened, his benefit with accumulated interest would have been worth about R2.4 million by March 2009.
In its response, the South Bakels Pension Fund trustees told De la Rey that Eckhardt was sent a letter in 2008, offering him the option to switch his retirement funds to a more conservative portfolio and he did not choose this option.
The fund management told De la Rey that members are obliged to submit a retirement claim form and it is only on receipt of this form that a member’s pension fund benefit is disinvested and moved to the fund’s bank account.
According to the fund rules, the fund is not liable for late payment interest in cases where members are indirectly responsible through submitting their claim forms late. However, in her ruling, De la Rey points out that, according to the Income Tax Act, you are entitled to your pension fund benefit as calculated on the date of your retirement.
“The law clearly shows that Eckhardt was entitled to his fund credit on May 31, 2008,” she says.
She ordered the South Bakels Pension Fund and Alexander Forbes Financial Services to calculate the difference between the amount paid out to Eckhardt and his pension fund benefit on May 31, 2008 within seven days of the ruling and to pay him the difference within two weeks of her ruling.
CONTACT
The Acting Pension Funds Adjudicator is Dr Elmarie de la Rey.
Telephone: 087 942 2700
Fax: 087 942 2644