DORCAS Seboko, a widow who almost lost her sanity, will perform her cleansing ceremony this weekend.
Seboko's problem started a few months after her husband Pat Seboko, a former Sowetan photographer, died.
She said her husband took out an investment policy with Momentum shortly after he received his early-retirement package.
She said her husband had the option of taking his entire retirement fund or of investing it.
He invested R225,738 with Momentum in April this year.
"He took a joint life annuity and he could cancel it within 60 days from the day he took it out," Seboko said.
She said the annuity provided a monthly income of R1,626 at the end of April and he died before receiving the second payment.
It was paid twice into his bank account, but his wife decided to cancel it because it was not suitable for her and her two school children's needs, she said.
She informed Momentum of her husband's death and asked that they pay the money directly into her bank account.
CANCEL POLICY
Because she could not meet her family's daily needs, she cancelled the policy .
Momentum then told her that the money would be deposited into Sowetan's account and not in hers.
"I was shocked," she said.
Momentum's letter dated June 17 reads in part: "If you find that this investment is not what you require, you may cancel it within 30 days, but not later than 60 days from the starting date of the investment. We will then refund the investment to the transferring fund after deducting any benefits they have already paid."
The transferring fund, Alexander Forbes, gave her husband leeway to do as he pleased with his money.
Lerato Mametsa of Momentum said on retirement, in accordance with the Pension Fund Act, the Fund would have given Mr Seboko the choice to either use the full proceeds to buy a compulsory life annuity or take one third of the proceeds in cash and buy a compulsory life annuity with the remaining two thirds.
She said a compulsory life annuity provides an income until the death of an annuitant.
"Seboko chose a joint life annuity with Momentum, which provides an income until the death of the last spouse," Mametsa said.
"Momentum has already updated its system accordingly and pays Mrs Seboko R1626,28 a month, which used to be paid to her late husband," she said
"Under normal circumstances, a compulsory life annuity cannot be cancelled. However, in terms of the Long-term Insurance Act, Mrs Seboko is entitled to cancel this annuity as the request was made within 60 days of the contract being issued," Mametsa said.
She said the cancellation amount will be subject to the deduction of the income amounts that have been paid.
"However, the cancellation must comply with the provisions of the Pension Fund Act, which requires the funds to be used to purchase a compulsory life annuity," she said.
She said Momentum will pay the proceeds to Alexander Forbes and not directly to the widow. Mametsa said Seboko will then have to nominate another recognised insurer, to whom the proceeds will be paid to provide her with a regular income.
But Alexander Forbes has no qualms about releasing all the funds to Seboko.
Candice Flowers-Nicholson of Alexander Forbes Financial Services said they are entertaining the request.
"Seboko indicated her desire to have the funds paid to her in a lump sum. Our financial planning consultants are currently looking into the various scenarios available to Mrs Seboko and will advise accordingly," Flower-Nicholson said.
LIFE ANNUITY
- A life annuity is designed to provide a regular income. It could be monthly, quarterly, half-yearly or yearly. This is guaranteed for the rest of the consumer's life.
- A guaranteed term can also be chosen. This is a minimum number of years for which the income should be paid to beneficiaries, in case the policy holder dies shortly after buying the annuity. In this case, the income would be paid until the end of the guaranteed term or until the death of the beneficiary.
- The regular amount payable is calculated taking into account the time the client is expected to live and the interest likely to be earned when the purchase sum is invested.
Widow relieved that she will get lump sum payout
DORCAS Seboko, a widow who almost lost her sanity, will perform her cleansing ceremony this weekend.
Seboko's problem started a few months after her husband Pat Seboko, a former Sowetan photographer, died.
She said her husband took out an investment policy with Momentum shortly after he received his early-retirement package.
She said her husband had the option of taking his entire retirement fund or of investing it.
He invested R225,738 with Momentum in April this year.
"He took a joint life annuity and he could cancel it within 60 days from the day he took it out," Seboko said.
She said the annuity provided a monthly income of R1,626 at the end of April and he died before receiving the second payment.
It was paid twice into his bank account, but his wife decided to cancel it because it was not suitable for her and her two school children's needs, she said.
She informed Momentum of her husband's death and asked that they pay the money directly into her bank account.
CANCEL POLICY
Because she could not meet her family's daily needs, she cancelled the policy .
Momentum then told her that the money would be deposited into Sowetan's account and not in hers.
"I was shocked," she said.
Momentum's letter dated June 17 reads in part: "If you find that this investment is not what you require, you may cancel it within 30 days, but not later than 60 days from the starting date of the investment. We will then refund the investment to the transferring fund after deducting any benefits they have already paid."
The transferring fund, Alexander Forbes, gave her husband leeway to do as he pleased with his money.
Lerato Mametsa of Momentum said on retirement, in accordance with the Pension Fund Act, the Fund would have given Mr Seboko the choice to either use the full proceeds to buy a compulsory life annuity or take one third of the proceeds in cash and buy a compulsory life annuity with the remaining two thirds.
She said a compulsory life annuity provides an income until the death of an annuitant.
"Seboko chose a joint life annuity with Momentum, which provides an income until the death of the last spouse," Mametsa said.
"Momentum has already updated its system accordingly and pays Mrs Seboko R1626,28 a month, which used to be paid to her late husband," she said
"Under normal circumstances, a compulsory life annuity cannot be cancelled. However, in terms of the Long-term Insurance Act, Mrs Seboko is entitled to cancel this annuity as the request was made within 60 days of the contract being issued," Mametsa said.
She said the cancellation amount will be subject to the deduction of the income amounts that have been paid.
"However, the cancellation must comply with the provisions of the Pension Fund Act, which requires the funds to be used to purchase a compulsory life annuity," she said.
She said Momentum will pay the proceeds to Alexander Forbes and not directly to the widow. Mametsa said Seboko will then have to nominate another recognised insurer, to whom the proceeds will be paid to provide her with a regular income.
But Alexander Forbes has no qualms about releasing all the funds to Seboko.
Candice Flowers-Nicholson of Alexander Forbes Financial Services said they are entertaining the request.
"Seboko indicated her desire to have the funds paid to her in a lump sum. Our financial planning consultants are currently looking into the various scenarios available to Mrs Seboko and will advise accordingly," Flower-Nicholson said.
LIFE ANNUITY
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