The Pension Funds Adjudicator (PFA) has ruled that pension funds must pay minimum withdrawal benefits, even if a fund’s rules do not require this, the PFA said on Friday.
The PFA said this ”landmark” ruling on Thursday was important for calculating benefits paid on resignation.
The Pension Funds Act was amended in December 2001 to make minimum withdrawal benefits compulsory. This minimum benefit ensured that people leaving funds would not get tiny payouts.
It was found that the complainant, a Mr Moller, was paid a withdrawal benefit from the De Beers Pension Funds after he resigned in October 2005, but had not received his minimum benefit entitlement.
De Beers was still waiting for rules allowing them to pay the benefit to be approved, but the adjudicator said they had to pay it as it was now law.
The adjudicator said the provisions of the minimum benefit legislation were mandatory for every fund registered after March 7 2002, effective from a date 12 months after the fund’s surplus apportionment date.
In this case the fund’s surplus date was March 1 2004 and since Moller had left more than a year after the surplus apportionment date he was entitled to the minimum individual reserve.
”This is ruling is an important reminder for all fund members to ensure that the fund has correctly computed their withdrawal benefits with reference to the minimum withdrawal benefit legislation,” the PFA said in a statement.
Moller’s complaint was principally that he would have been entitled to a greater benefit had he been retrenched, which he regarded as unfair. The adjudicator determined that he had received his correct entitlement in terms of the rules, and concluded he could not interfere on that account. — Sapa