Pension fund administrators can now be penalised

PENSION funds administrators that unreasonably delay the transfer of members' fund to another can now be penalised.

The new Pensions Fund Adjudicator Muvhango Lukhaimane, who was appointed last month, has ensured that the pensions fund members will not lose a penny of their retirement money because of an unreasonable delay by fund managers who delay their investments.

So any pension fund administrator asked to legally transfer funds from their coffers should learn a lesson from the Umbrella Retirement Fund and Liberty Group not to repeat the same mistake.

Lukhaimane ordered these two companies to reimburse R250000 to the members of Obo Specialist Metals. This was the projected amount lost due to delayed benefit transfer.

Lukhaimane says Obo specialist Metals notified Umbrella Retirement Fund and Liberty Group to transfer all members' benefits to the Vitae Umbrella Provident Fund, which was administered by Vic Glassock and Associates in April 2005.

She says the resolution to transfer funds was done in terms of Section 14 of the Pensions Act and then faxed to Liberty Life on June 20 2005.

But the two institutions did not follow the instruction, she says.

It also took the employer, Obo Specialist Metals, two years to notice that the transfer of the employees' benefits to the new administrator was not done, she says.

Lukhaimane says the employer had wanted to transfer funds from the Vitae Fund to the FundsAtWork Umbrella Provident Fund, which is administered by Momentum, when they noticed this.

The employer successfully argued that had the employees' money been invested in the Vitae Fund under the Allan Gray portfolios it would have achieved higher investment returns and it would have had a fund credit of R739593.28 by July 2007.

At the time of request the members' credit held by Umbrella Retirement Fund and Liberty Group was R483167.

She says the employer had further submitted that they waited for more than three years for Corporate Selection Umbrella Retirement Fund to implement its instruction to effect the Section 14 transfer.

"As a result of Umbrella Retirement Fund's delay in effecting the transfer, the members suffered a loss of R256426.15 in investment returns based on investment returns from the Vitae Fund compared to what Umbrella Retirement Fund and Liberty Group offered," she says.

In her determination, Lukhaimane says the rules of a fund were supreme and binding on its officials, members, shareholders and beneficiaries and anyone so claiming from the fund.

Lukhaimane says the delay in effecting the Section 14 transfer was unreasonable and may have caused a loss of investment returns on the part of the complainant.

She ordered Umbrella Retirement Fund to calculate the complainant's investment return losses as a result of the delay in effecting the Section 14 transfer.

This fine will be calculated from June 20 2005 to October 5 2009, and pay the investment returns lost by the members together with interest at the rate of 15.5% per year.