Your rights to withdraw money from a preservation fund, the fact that you can do little about retirement problems that took place more than three years ago and the need for retirement fund administrators to keep proper records are highlighted in the following cases which were ruled on by Pension Funds Adjudicator, Professor John Murphy.
Case 1
You should be aware that your rights to withdraw money from a preservation fund may be restricted by the retirement fund out of which you transferred your money. But the pension fund can place this restriction only if it is allowed to do so under the rules of the fund, says Murphy.
A preservation fund is a vehicle where you can "park" your retirement funds if you resign, are retrenched, or your retirement fund is liquidated.
Any withdrawal from a preservation fund is, however, taxable in your hands.
Murphy says the right of a member to withdraw money from a preservation fund, and the rights of the transferring fund or its participating employer to restrict withdrawal, should be determined by the rules of the two funds and the contractual rights of the parties.
In a recent case before Murphy, Johan Venter wanted to make a withdrawal from the Protektor Pension Fund, a preservation fund, but was not allowed to. Venter had transferred his pension benefits of about R110 000 to the preservation fund after his previous fund was liquidated. At the time of transfer he believed he could make one withdrawal.
The Protektor Pension Fund refused the withdrawal on the grounds that the previous fund had restricted him from doing so but it appeared to be a mistake.
Two other members, who had also transferred to the preservation fund, were not bound by the same restriction.
Murphy ruled that Venter was entitled to withdraw his total benefit, because there was no evidence that the transferring fund or employer had the power or right to restrict withdrawals in terms of its rules.
He added that the Protektor Fund acted in good faith because it deals with many participating employers and has to be careful to honour the conditions under which benefits are transferred from other funds.
Case 2
Murphy has indicated that he will not easily entertain retirement fund complaints that go back more than three years, unless there is good cause.
The complaint of Johannes van der Westhuizen, a former Sanlam sales consultant who resigned from his job 32 years ago, was that he did not receive pension benefits to which he was entitled under the rules of his pension fund.
Van der Westhuizen said that when he resigned he was under the impression that he would only receive his pension benefits at the age of 66. This was why he did not query the Sanlam Pension Fund's failure to pay him, in accordance with the fund's rules, when he resigned.
In 1995, when he turned 66, he enquired about his pension and was told that he was not entitled to any payment because he must have been paid when he resigned.
The Sanlam Pension Fund told Murphy that it no longer had records of Van der Westhuizen or his contribution history although it conceded that he must have been a member. However, the complaint was more than three years old and Van der Westhuizen was not not entitled to any relief.
Murphy agreed that the time in which the complaint could be investigated had lapsed.
As an insurance broker, who was accustomed to dealing in financial products Van der Westhuizen ought to have taken steps to find out when his pension benefits were due, he said.
Case 3
You are entitled to expect your retirement fund administrator to perform his or her duties properly.
Southern Life had to pay more than R128 000 plus interest in death benefits to a widow because it did not keep proper records.
Rosalind Crone complained to Murphy that Southern Life had maladministered the Little Switzerland Hotel Provident Fund, of which her husband was a member.
She claimed death benefits when her husband died and was turned down by Southern Life because it had not been advised of his membership details by the hotel.
Southern blamed the broker for not providing it with information and the broker blamed the hotel.
Murphy found that the broker was under no obligation to supply the updated information to Southern Life.
In terms of the rules, Southern Life should have made a proper written request for information to the employer. This should have been served on the employer who should have been advised of the consequences of not providing the updated information.
"Southern Life had a duty to take proper steps to obtain the information (and was paid a substantial administration fee) and it failed to do so," he said.