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Landmark ruling in respect of the payment of resignation benefits

05 October 2006 Pension Fund Adjudicator


The pension funds adjudicator issued an important ruling dealing with the computation of resignation benefits.

The complainant, Mr Moller, was a member of the De Beers Pension Fund.  He was paid a withdrawal benefit after his resignation in October 2005. His 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. However, it appeared that the complainant had in all likelihood not received his minimum benefit entitlement in terms of the Pension Funds Act. With effect from 7 December 2001 the Pension Funds Act was amended to make provision for the payment of minimum withdrawal benefits to members who withdraw from the fund. 

The Adjudicator stated that the provisions of this minimum benefit legislation are mandatory for every fund registered after 7 March 2002, effective from a date 12 months after the funds surplus apportionment date. In this instance the funds surplus date was 1 March 2004 and since the complainant exited in October 2005 (more than 12 months after the surplus apportionment date) he was entitled to the minimum individual reserve. The Adjudicator further stated that there was no need for the fund to wait for the amendment of the rules to apply the minimum benefit legislation, since in terms of section 14A every fund must pay a withdrawal benefit which is not less than the minimum individual reserve.  This provision overrides the rules of any fund.

The adjudicator ordered the fund to calculate the benefit due to the member in terms of section 14A and B of the Act with regard to the minimum individual reserve and pay the member that amount less any amounts already paid plus interest thereon.

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.

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