20 and counting…
The pension funds adjudicator (pfa) has issued the 20th ruling against a retirement annuity fund.
And for good measure, he also referred the matter to the Minister of Finance and the Registrar of Pension Funds, to consider declaring certain practice/s an undesirable business practice as contemplated in section 32A of the Act.
According to the statement released by his office: “…This ruling involved the Prosure Retirement Annuity Fund administered by Metropolitan Life.
The details:
The member joined the fund on 1 February 1999 and contributed until 1 December 2000 a total of R2016.00. When she stopped paying, her account was debited with R1786.57 representing various expenses.
Her value was R238.35 which, in the view of Metropolitan, was too trivial to administer and the policy was lapsed.
On 17 June 2002 the member passed away and no death benefit was paid. Her dependants lodged a complaint with the adjudicator.
The investigation:
After examining the rules of the fund and the policy document, the adjudicator concluded that there was no basis for the fund to charge the fees/expenses on the cessation of contributions.
Regarding the quantification of the death benefit, the Adjudicator had enormous difficulty in ascertaining the meaning of the provision in the policy which set out how the amount should be calculated, by virtue of a very badly drafted clause.
The ruling:
Thus, the Adjudicator relied instead on the fund rule which implicitly provided for a return of contributions together with interest as a minimum benefit in the event of death of a member.
He therefore ordered Metropolitan to credit the deceased’saccount in the fund with the penalties/expenses deducted and ordered the fund to pay the death benefit to the deceased’s dependants on or before 2 September 2005.
The referral:
Finally, the practice of levying fees/charges/costs not disclosed in the rules of the fund or the policy document has been referred to the Registrar and Minister of Finance.
In terms of section 32A the Registrar, with the consent of the Minister, may declare a practice or method of conducting business to be an irregular or undesirable business practice.
The Adjudicator strongly urged the relevant authorities to intervene as members in the industry will continue to be disadvantaged, until this practice is properly regulated.
