Recently the Pension Funds Adjudicator (PFA), Vuyani Ngalwana issued rulings on a further 22 retirement annuities (RAs). Life companies have chosen to settle 15 of these rather than face the negative publicity. This brings to 54 the total number of RA rulings since March. The life companies are appealing seven of these in the High Court.
Ngalwana went a step further when he recommended that Minister of Finance Trevor Manuel create a framework to govern costs relating to endowment policies. These fall under the Long-Term Insurance Act, but its adjudicator cannot rule on costs or how they are determined. Earlier this year, Ngalwana recommended that Manuel declare the fees he had ruled against to be illegal, to avoid repeated rulings on the same matter.
According to Naleen Jeram, the deputy PFA, the majority of rulings on RAs have related to excessive costs incurred by members.
Jeram says that, although these cases tend to be the ones that make the headlines, they only make up about 10% of the total workload of the PFA. The PFA oversees all pension-related complaints, which include pension funds, provident funds, preservation funds and RAs, and makes approximately 300 rulings a month, a large percentage of which finds in the favour of the fund. But in the case of the RA rulings, the majority of judgements have been in the favour of the fund member.
Jeram says it is important people realise that if they have a problem with any pension-related scheme, they can approach the PFA for a ruling. Complaints against the administrator of the fund, the employer, the insurer, trustee, actuary or underwriter are taken into consideration. With the new systems in place, any member can expect a ruling within four months of lodging a complaint. This has been a big step forward in the restructuring of the PFA office as it was previously understaffed and bogged down by enormous case loads. Members did not have access to effective channels that could deal with complaints about their retirement funds, which have been identified by the government as vehicles that require special protection.
One of the most common complaints is around withdrawal benefits relating to pension funds where someone has left the company before retirement and is entitled to receive a payment, says Jeram. “Death benefits and disability benefits are also highly contentious issues, and we see a lot of queries about these.”
The PFA also handles cases dealing with the ability of an ex-spouse to attach pension funds for non-payment of maintenance as well as disputes regarding the benefits paid on retirement.
“Another of our biggest complaints relates to non-payment of pension fund contributions by employers. It is extremely important that members ensure they receive regular updates from the pension fund trustees confirming that these payments have been made. If they have not, we must be contacted immediately so that we can take immediate action and not wait until the fund has been liquidated,” says Jeram.
RA fees too high?
If you have reduced or stopped your RA contributions and, as a result, have been charged excessive fees, contact the fund and ask for a full breakdown of costs over the entire investment period. If the fund refuses, contact the Pension Funds Adjudicator who will order that costs be disclosed within 14 days.
Compare these costs with your original policy documentation. If they are not disclosed in the policy document, lodge a complaint with the Pension Funds Adjudicator. He will send you a specimen guideline on how to file your complaint.
It costs nothing to lodge a complaint, no lawyer is needed and the ruling carries the same weight as a court order. Either party has the right to challenge the ruling in the High Court.
Western Cape, Eastern Cape, Northern Cape, KwaZulu-Natal or the Free State: Tel: (021) 674 0209. Gauteng, North West, Limpopo or Mpumalanga: Tel: (011) 884 8454.