Please quote our reference PFAGA105732006 RE DETERMINATION IN

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Please quote our reference PFAGA105732006 RE DETERMINATION IN Powered By Docstoc
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Please quote our reference: PFA/GA/10573/2006

RE:

DETERMINATION IN TERMS OF SECTION 30M OF THE PENSION FUNDS ACT 24 OF 1956 (the Act): DE KLERK R (“the Complainant”) v MINE EMPLOYEES PENSION FUND (“the Respondent”)

1. [1.1] [1.2]

Introduction The complaint concerns payment of a retirement benefit. The complaint dated 11 September 2006 was received by this office on the same date. A letter acknowledging receipt thereof was sent to the Complainant on 13 October 2006. On the same date a letter was dispatched to the Respondent giving it until 13 November 2006 to file its response to the complaint. A response was received from the Respondent on 26 September 2007.

[1.3] After reviewing the written submissions, it is considered unnecessary to hold a hearing in this matter. The determinations and reasons therefore appear below. 2. [2.1] Factual Background The Complainant contended that he was not advised of his options to transfer his benefit to another fund; consequently that he could not

M Mohlala (Adjudicator), R Maharaj (Snr Assistant Adjudicator), M Ndaba (Snr Assistant Adjudicator), M Daki (Snr Assistant Adjudicator), S Mothupi (Snr Assistant Adjudicator), T Dooka (Snr Assistant Adjudicator), C Seabela ( Snr Assistant Adjudicator) M Ramabulana (Snr Assistant Adjudicator), L Mbalo (Assistant Adjudicator), P Mphephu (Assistant Adjudicator), P Myokwana (Assistant Adjudicator), L Nevondwe (Assistant Adjudicator), S Mokgara (Assistant Adjudicator), L Molete (Assistant Adjudicator), A Mnqinya (Assistant Adjudicator), T Nawane (Assistant Adjudicator), B Mahlalela (Assistant Adjudicator), G Mothibe (Assistant Adjudicator), L Mogashoa (Assistant Adjudicator), T Mbhansa (Assistant Adjudicator) Financial Manager: F Mantsho, Accountant: R Soldaat, HR Manager: P Mhlambi

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withdraw his benefit from the Respondent as prohibited by its Rules to allow same. [2.2] The Respondent contends that is cannot accede to this request because its rules and the South African Revenue Services (SARS) prohibits it to act in such manner. 3. [3.1] Complaint The Complainant submitted that he was a member of the Respondent from 27 October 1980 to November 2002. He was promoted and became a member of Sentinel Provident Fund (“Provident Fund”). He contends that he was advised to leave his contributions with the Respondent as his contributions would earn higher interest. He submitted that after he was dismissed on 17 December 2004 he managed to receive his benefit from the Sentinel Provident Fund but the Respondent refused to allow him to withdraw his funds. He submitted that in 2003 SARS gave the Respondent a period within which it had to advise its members to elect an option of either transferring the funds or leaving them with the Respondent. He contended that he was not advised of the option which is a reason for his benefit remaining with the Respondent. He submitted that the Respondent advised him that there were cases similar to his and that the Adjudicator was investigating same. Further that if the verdict of the said cases favoured the Complainant, he would be paid his benefit. Responses This office received a response from G. Meyer, Manager: Legal Department of the Respondent. The Respondent submitted that during mid-November 2005 it provided a document headed “COMPLAINTS RELATING TO THE WITHDRAWAL OR TRANSFER OF BENEFITS FROM THE MINE EMPLOYEES PENSION FUND: GENERIC RESPONSE”. It stated that these matters were sent to Mr. Radesh Maharaj of this office. The Respondent confirmed that its records reflected that the Complainant was a contributing member from 5 June 1990 to 31 October 2002.Further that on 1 November 2002, he contributed to Sentinel Mining Industry Retirement Fund until 17 November 2004 during the latter period, it was submitted, the Complainant was a “deemed member” (noncontributory) of the Respondent.

[3.2]

[3.3]

4. [4.1] [4.2]

[4.3]

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[4.4]

The Respondent further submitted that during this period its structure was coverted by ways of complete revision of its Rules. It was suggested that he leave his Funds with the Respondent for better growth. The Respondent replied that:

[4.4.1] such advice could not have been given as its Rules do not provide for transfer of benefits from it to Sentinel. The complaint was obliged to remain a non-contributing member of the Respondent whilst he was Sentinel’s member. [4.4.2] during that period, it was engaged in discussions with SARS, over SARS’’s unwillingness to approve the [non-contributing members] to terminate membership. It was submitted that the Complainant could transfer his fund credit to the Provident Fund following Conversion. It stated that SARS was willing to allow a withdrawal period of 9 (nine) months following Conversion during which non-contributory members would be permitted to withdraw or transfer their Funds Credits. At the end of that period only transfers were permitted and even then, only to a Retirement Annuity Fund or the Fund of the member’s current employer i.e. not a Preservation Fund. [4.4.3] in the case of members such as the Complainant (who remained in the service of the same employers as they were when they ceased contributing to the Respondent) the requirement was even stricter as such a member would not even be permitted to transfer after the end of the 9 months period. 4.5] Communications in this regard were distributed to members, such communications included the posters for employers to exhibit at workplaces. It was submitted that, this situation was reinforced by SARS General Note (“GN 35 “) and the Respondent had to amend its rule in accordance with same. Further that, it has recently submitted draft Rule Amendments to the Registrar but contended that, there is doubt whether same will provide relief for a member in the position of the Complainant who firstly, was already a non-contributory member prior to Conversion, secondly, did not transfer his Fund Credit to Sentinel, and thirdly had terminated membership of the Provident Fund. The Respondent averred that its Rules allowed a non-contributory members to terminate their membership under most circumstances before retirement age except in the case of members who remained in

[4.6]

[4.7]

4.8]

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the service of the participating employer as a contributing member. Further that it is unable to accede to the Complainant’s request, as SARS has imposed restrictions. 5. [5.1] Determination and reasons therefor The Complainant would like to withdraw his benefit. He is not allowed by the Respondent, whose submission is that, it is restricted by SARS GN35 to do so. According to the Respondent GN35 provides that noncontributing member may not withdraw their benefits before they reach their retirement age. It was submitted that because the Complainant was a already a noncontributing member prior to conversion and that he did not transfer his Fund Credit to the Provident Fund, the proposed rule amendments submitted to the registrar would not be of great assistance to him. The Respondent’s rules defines ‘Conversion date’ as : “1 March 2003 as notified to the Members, Pensioners, the Employers and the Registrar.” Therefore the Respondent, when it stated that the Complainant became a non-contributory member prior to conversion meant that, it happened prior to 1 March 2003, which is correct because the Complainant exited Sentinel in November 2002

[5.2]

[5.3]

A non-contributory member is defined as a member...

“(a)

(b)

who ceased to be eligible for membership of the FUND and elected to become a non-contributory member in terms of the rules in force prior to the CONVERSION DATE in respect whom the FUND has retained his benefit entitlement in terms of rules 5 or 6,or who, after the CONVERSION DATE, ceased to be a Contributory member of the fund in terms of the rules and who elected not to withdraw a benefit from the FUND , but rather to defer the payment of benefits until he qualifies in terms of rules 5 or 6.”

[5.4]

The Respondent’s Rule 3.4 reads as follows:

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“3.4.1. A Non-contributory member shall remain a MEMBER of the FUND and entitled to a benefit in terms of the Rules unless: (a) He elects the option at the Conversion Date or such later and on terms and conditions as deaded by the Trustees, to transfer in terms of Rule 9.2.2 or (b) He elects to withdraw from membership of the fund within 9 months After the conversion date, provided that at the conversion date he is no longer in the service of the same Employer he was employed by when he be came a non-contributory member.” [5.4] On examination of the above, it is evident that the Complainant is indeed a non-contributory member and that if he has exercised an option to withdraw on Conversion Date, he would still not be able to do so because he was still in service of the same Employer.(see rules 3.4.1 (b) above.) According to the Respondent SARS GN 35 has strengthened the Rules and has imposed stricter conditions on a withdrawal or transfer by the non-contributory members. The Respondent’s Rule 5.1.2 provides that a non-contributory member who has attained the normal retirement age. Shall be entitled to receive his benefit. In addition to the above the Complainant has attached a letter which was sent to him by the Respondent. Note 10 thereof reads thus: “ Non-contributing members- In accordance with SARS practice, if you are an existing non-contributing member, you no longer have the option, in terms of the rules, to withdraw or transfer your fund credit. you remain a member until you become eligible for a retirement or deal benefit” Also attached is a letter dated 17 August 2006 which advised the Complainant that, due to SARS instructions, the practice of paying withdrawal benefit to non-contributory members had been amended and the Complainant’s benefit would be preserved until retirement.

[5.5]

[5.6]

[5.7]

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[5.8] In view of the above it follows that the Respondent is not in a position to accede to the Complainant’s request. The former is not in a position to act contrary to the provisions of SARS GN 35 and its Rules. [5.9] Therefore, until the Rules or the SARS GN 35 are amended to favour the Complainant, no withdrawal benefit may be accessed. [6] Order The complainant is dismissed. DATED AT JOHANNESBURG ON THIS……… DAY OF...2009. Yours faithfully _________________________ MAMODUPI MOHLALA


				
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Description: Please quote our reference PFAGA105732006 RE DETERMINATION IN