Trustees of your retirement fund have a duty to provide you with full and
accurate information each time you must make a choice of any sort, Kobus
Hanekom, of Sanlam Employee Benefits, says.
Trustees who fail to provide adequate information run the risk of damage
claims, he told a recent meeting of the South African Institute of Chartered
Accountants, in Cape Town.
"Such a failure, without appropriate justification, constitutes an improper
exercise of trustees` powers and amounts to maladministration, for which
they could be held responsible."
Hanekom says the law sets out fairly sophisticated measures to deal with
minimum communication and disclosure requirements of trustees.
"Trustees have a duty to provide generic information, such as the names of
trustees and level of cover, to members.
"They must disclose benefit options, notify members of fund restructuring
and assist them in making benefit or investment choices.
"However, trustees should be particularly alert when responding to requests
for additional specific information.
"The most important consideration would be for them to make full and
appropriate disclosure in writing, wherever possible, where members are
required to make a choice of some kind or to defend a right," Hanekom says.
In some cases, trustees may have to disclose minutes of trustee meetings and
information relating to any surplus in the fund, he says.
You have a right to know about different benefits available to you and about
the tax implications of each.
And if you choose a particular benefit before you have been notified in
writing about the different option, the Pension Funds Adjudicator could
order the fund to allow you to make your choice again, as he has already
done in one case.
"Where information is provided, it is crucial that trustees ensure that it
is 100 percent correct," Hanekom says.
Failure to ensure that the information is accurate constitutes
misrepresentation on the part of the trustees, and members of the fund could
insist on making the decision again, he adds, quoting the recent Langeberg
Foods case, where the trustees made a mistake of nearly R90 million in
estimating the size of the pension fund surplus.
Pensioners had to take a decision on staying in the fund or buying a pension
from Sanlam and one of the elements they took into account was the size of
the surplus.
In the Langeberg case, Professor John Murphy, the Pensions Adjudicator,
found that the trustees did not take all reasonable steps to protect
members` interests and ordered the fund to negotiate a settlement with the
pensioners.