PPS RA Fund welcomes move to legislate against causal event charges
04 November 2013 | Company News & Results | PPS | Advocate Thinus Ferreira, PPS
Reports that the Pension Funds Adjudicator is requesting the Financial Services Board (FSB) to look into causal event charges – a charge imposed by long-term insurers when retirement annuity members wish to transfer their assets to another fund – and possible legislative intervention to address the issue, should be welcomed by the retirement industry.
That is the view of Advocate Thinus Ferreira, Principal Officer of the PPS RA Fund, who says causal event charges, which include early termination charges, are against the member’s interest and also contravenes forthcoming Treating Customers Fairly (TCF) legislation.
"The PPS RA Fund welcomes the intervention by the Pension Funds Adjudicator on this matter as we believe it is important that prohibitive charges are no longer levied on any retirement fund members wishing to transfer to new funds.”
He notes that the PPS RA Fund Board of Trustees has already urged the Adjudicator to investigate the levying of excessive termination charges upon the occurrence of a causal event.
Ferreira states that the introduction of the Treating Customers Fairly (TCF) initiative by the FSB states unequivocally that: "Customers do not face unreasonable post sales barriers to change products, switch providers, submit a claim or make a complaint.”
The move by the Pension Funds Adjudicator follows a complaint lodged by a PPS member who was told she would be charged R45 000 as a causal event charge – payable to the insurer and administrator, Sanlam Life - if she opted to transfer from one investment vehicle under the Fund to another. This would have equated to 30% of her total fund value.
"We believe the fact that the member concerned lodged a complaint demonstrates that she regards the charge levied as a prohibitive post-sales barrier. The PPS RA Fund supports the introduction of TCF as soon as possible to ensure that all retirement fund members are able to transfer to other funds without incurring prohibitive charges,” says Ferreira.
He further notes that the Fund engaged with Sanlam Life in July 2012 to remove causal event charges from its members who were invested in RA funds, which was rejected.
"The PPS RA Fund is prepared to assist the FSB in any way possible in order to facilitate a resolution to the issue and to protect the future interests of both the PPS RA Fund and all retirement fund members, including legislative intervention, where required,” concludes Ferreira.
