SOI : Old Mutual ready to receive claims

Old Mutual is delivering on its commitment under the Statement of Intent agreement to enhance the savings of customers who made contractual changes to their policies.

The life industry signed the Statement of Intent agreement with the Minister of Finance in December 2005 in which it undertook to provide minimum values o­n savings policies to which contractual changes have been made.

Regulations under the Long-term Insurance Act that gave effect to the Statement of Intent, came into operation o­n 1 December 2006.

Peter de Beyer, the Managing Director of Customer Solutions at Old Mutual, says Old Mutual has set aside approximately R120 million to fund cash payouts to former members and to date, R323 million has been paid to existing policyholders by way of enhancements to their policy values.

The values of qualifying RA and endowment policies that were still active at 01 December 2006, and to which contractual changes have been made between 01 January 2001 and 1 December 2006, have already been enhanced. These members and policyholders are being notified in writing of such enhancements.

Cash payouts may be due in the case of RA fund policies that were no longer active as at 01 December 2006 in terms of the Statement of Intent. Nominees or dependants of deceased former members may also qualify, subject to the provisions of the Pension Funds Act. The regulations place the o­nus o­n such former members or their beneficiaries to request a cash payment.

De Beyer says that retirement annuities (RA's) remain a valuable and tax efficient way of saving for retirement. For fund members who pay their contractual premiums until their chosen retirement date, RAs provide excellent value for money. However, in the case where members choose to reduce their contributions, stop paying their contributions or decrea se the term of a traditionally structured RA, the costs already incurred are recovered from the accumulated fund values of the policies. This will result in a lesser return o­n investment for such customers.

Life assurers signed the Statement of Intent to provide enhanced values to those most adversely affected because they recognise that in today's world, the financial situation of policyholders is more likely to change over their lifetimes. This can affect their ability to meet their obligations under their policy contracts or the tax deductibility of their premiums, he says.

Policies that qualify for a cash payout

Retirement annuity or provident fund policies that meet the criteria below qualify for a cash payout. The policy must have:

-   Ended before 01 December 2006;
-   Been changed between 01 January 2001 and 01 December 2006. Changes include  taking early retirement, stopping  premiums prematurely, decreasing premiums and reducing the term of the investment;
-  Had its investment value reduced by more than 35 percent due to the contractual   change.

When cash payouts will be paid

Old Mutual is ready to process claims from qualifying former members but is waiting for amendments to the Income Tax Act to be able to make cash payments to all qualifying members.

Contacting Old Mutual

Former members, their dependants or nominees who qualify for cash payouts have until 01 December 2009 to enquire about payments that may be due to them.

They should contact Old Mutual o­n telephone number 0860 104 738, send an email to soi@oldmutual.com, or mail a letter to P O Box 335, Mutualpark, 7451.

Further information o­n the new regulations can be found o­n the Old Mutual website at www.oldmutual.co.za/agreement