What is your RA doing?
The Pension Funds Adjudicator recently issued a landmark ruling dealing with the ability of retirement fund annuity policy owners to transfer their policies prior to retirement age. Many investors who dutifully and, for many years, invested hard earned savings into retirement annuities have become increasingly disillusioned with their investment growth, or lack of it. Up until now investors have been in a "Catch 22" situation where the specific underlying rules of a retirement annuity fund prevented them from switching their investment and portfolio to an alternate fund manager or institution.
The Adjudicator ruled that not allowing investors to transfer their portfolio was contrary to the rules of the SARAF, the Pensions Fund Act and the Financial Institutions Act. All these pieces of legislation impose, upon the Trustees of retirement annuity funds, an obligation to act in the best interests of the investors at all times. The Adjudicators interpretation was that by not allowing transfers across funds, trustees were not acting in the best interests of investors. In addition, the Income Tax Act allows for translocation of benefits,therefore why should trustees restrict transfers by implementing archaic and unfair fund rules? This is most definitely welcome news for all investors who are members of poor performing retirement annuities.
The so called "old generation" retirement annuities are traditionally opaque in nature and it is virtually impossible to obtain an accurate breakdown of all the costs and fees that are levied against the investment portfolio. It is also often difficult to find out the exact nature of the underlying investment portfolio and poor performance is more often than not the legacy that investors are left with. Up until now investors had to stick with the "lemons" that they had been sold purely because the rules of the fund prevented them from changing. The ruling of the Pension Fund Adjudicator, subject to approval from the Registrar of Pension Funds, has significantly empowered investors and allowed for a more even, fair and competitive playing field.
Retirement funding is a difficult enough exercise under normal circumstances,
having to overcome high costs and inept investment returns. At BJM Private Client Services we warmly applaud the Pension Fund Adjudicators ruling and would like to encourage clients to review their retirement annuity funds.
When investing with BJM, whether it is through a "Personal Direct Portfolio"
or through our multi-manager range of funds, you can be guaranteed of zero initial fees and that all ongoing fees will be fully disclosed. You will be able to discuss your risk and return requirements with a specific relationship manager that will be assigned to look after your portfolio. We encourage you to make contact with your BJM Relationship Manager and discuss this matter in more detail.
Source : BJM Private Client Services November 2006 newsletter - eXchange
