Latest news with #Lukhaimane
IOL News
11-05-2025
- Business
- IOL News
Pension funds must comply with PFA information requests, says Muvhango Lukhaimane
The Pension Funds Adjudicator, Muvhango Lukhaimane, asserts that pension funds must provide requested information without beneficiary consent, clarifying the PFA's authority under the Protection of Personal Information Act. A pension fund is obliged to provide the Pension Funds Adjudicator (PFA) with requested information without obtaining consent from beneficiaries, says Muvhango Lukhaimane, the PFA. According to Lukhaimane, funds cannot use the Protection of Personal Information Act (POPIA) as an excuse to withhold information from the PFA. She says that as a public body, as defined in the Act, the PFA has the right to access personal information when performing its duties. This came to light in a recent determination, where Lukhaimane made it clear that the PFA falls within the definition of a tribunal under POPIA and is permitted to collect personal information when necessary for its investigations. The issue arose when a fund initially refused to provide its investigation report to the PFA, citing the need to protect beneficiaries' personal details. Only after being reminded that POPIA allows the PFA to process personal information in the exercise of its powers and duties, did the fund comply with the request. Lukhaimane clarified that, in matters involving death benefits, the PFA's role is to assess whether the board acted rationally, reasonably, and within the law. 'Therefore, a fund cannot hide behind POPIA and bears the onus of demonstrating that it has conducted a proper investigation per section 37C,' she says. The Financial Services Tribunal further reinforced this point, stating that the PFA should insist on investigation reports to confirm that funds have provided sufficient information to justify their allocations. A recent complaint brought before the PFA highlighted the consequences of inadequate investigations. The case involved the Eskom Pension and Provident Fund, which was tasked with allocating a lump sum death benefit of R560,160 following the passing of a pension fund member. The board distributed the benefit among the deceased's customary spouse, life partner, and children, but Lukhaimane was not satisfied that a thorough investigation had been conducted to justify the final distribution. She ruled that the fund had a duty to actively investigate the extent of each beneficiary's financial dependency on the deceased to ensure an equitable allocation. The deceased had nominated his customary spouse to receive 80% of the benefit, with 10% allocated to his life partner and the remainder to two of his children. However, the actual allocation deviated significantly from his wishes: 28% was allocated to his customary spouse 28% to his life partner Two percent each to five major children 30% to a minor child Two percent each to two other minor children The fund justified its decision by arguing that the life partner qualified as the deceased's factual dependant, given that she was 50 years old, unemployed, and had no immediate income prospects. However, Lukhaimane found that the board had failed to give sufficient weight to the beneficiary nomination form, which must be a substantial factor in any decision on death benefits. Lukhaimane stressed that the law recognises three categories of dependants: Legal dependants – Those for whom the deceased had a legal duty of support, such as spouses and children. Factual dependants – Individuals who relied on the deceased for financial support, but for whom there was no legal obligation. Future dependants – Those who could have become financially reliant on the deceased over time. While qualifying as a legal or factual dependant does not automatically entitle someone to a portion of the benefit, the determining factor remains financial dependency. Lukhaimane says dependants must not be left destitute by the death of the deceased, which places an obligation on the funds to actively investigate the financial circumstances of each beneficiary. 'There must be a good reason for a fund not to give effect to a nomination, to justify its decision to deviate from the wishes of the deceased,' she ruled. She also criticised the Eskom Pension and Provident Fund for failing to gather adequate proof of dependency, stating: 'The fund indicated that the complainant and the deceased's major children failed to provide proof of the extent of their financial dependency on the deceased. However, there is a duty on the fund to actively investigate this before making an allocation.' In this case, the board's decision was set aside, reinforcing the importance of transparent and fair decision-making in pension funds. Ultimately, she says pension funds have a duty to ensure that dependants receive what they are entitled to, not through assumption or incomplete investigations, but through rigorous and well-documented financial assessments. PERSONAL FINANCE
IOL News
06-05-2025
- Business
- IOL News
Understanding the exemption of legacy policies in the new pension system
Any policy in respect of a retirement annuity plan entered into before 1 September 2024 - is exempted from the two-component benefit system. Members of pension funds must understand the implications of the new two-component retirement system and how legacy policies are exempted from it, following a recent ruling by the Pension Funds Adjudicator. Any policy in respect of a retirement annuity plan entered into before 1 September 2024 - is exempted from the two-component benefit system. The two-component pension system, implemented on 1 September 2024, splits retirement fund contributions into a "Savings Component" and a "Retirement Component". One-third of contributions goes to the Savings Component, which allows members to withdraw funds before retirement, while the remaining two-thirds go to the Retirement Component, which must be used to purchase a retirement income product. Muvhango Lukhaimane, the Pension Funds Adjudicator, recently ruled on a complaint received from a fund member, who was aggrieved that the South African Retirement Annuity Fund denied him his right to withdraw from his savings component. The complainant's policy commenced on February 1, 1998, with a contractual retirement option date of February 1, 2028. The complainant had a fund credit of R63 134.74 on June 15, 2024. The fund submitted the Income Tax Act (ITA) provides for the exclusion of legacy policies, defined as pre-universal life and universal life policies. It indicated that the complainant's policy fell under this category and was, therefore, excluded from the new two-component retirement system. In compliance with the rules of the Financial Services Conduct Authority, the fund amended its rules to provide that the relevant elements of the two-component system would not apply to legacy retirement annuity policies. The fund submitted that the complainant had an option to transfer his current policy to a two-component compliant retirement annuity to benefit from the new system. The deadline for this transfer was August 1, 2024, and the fund did not receive a transfer request within this period. The fund indicated that the complainant may transfer this contract to a compliant retirement annuity. However, he would need to reinstate the premiums to start accumulating value in the savings component going forward to exercise a savings withdrawal in terms of the two-component retirement system. In her determination, Lukhaimane said it was clear from the fund's submissions that the complainant's policy was exempted from the two-component retirement system in terms of section 1 of the ITA and the fund rules. She said she was satisfied the fund acted lawfully in terms of its rules, the ITA and the policy contract in refusing to pay the complainant the withdrawal he requests. The complaint was dismissed. The Office of the Pension Funds Adjudicator is a statutory body established to resolve disputes in a procedurally fair, economical, and expeditious manner. The adjudicator's office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. THE POST
IOL News
06-05-2025
- Business
- IOL News
Understanding the legacy policy exemption in South African retirement annuities
Members of pension funds should be aware that legacy policies are exempt from the new two-component benefit system, as clarified by the pension funds adjudicator, Muvhango Lukhaimane. Members of pension funds are advised to understand that a legacy policy, any policy in respect of a retirement annuity plan entered into before September 1, 2024, is exempted from the two-component benefit system, according to the pension funds adjudicator, Muvhango Lukhaimane. She says the two-component pension system, implemented on September 1, 2024, was designed to offer greater flexibility to retirement fund members by splitting contributions into two distinct components. One-third of the contributions are allocated to a Savings Component, which allows members to make withdrawals before retirement, while the remaining two-thirds go to the Retirement Component, which must be used to purchase a retirement income product upon reaching retirement age. Recently, Lukhaimane ruled on a complaint from a fund member who was frustrated that the South African Retirement Annuity Fund denied his request to withdraw from his savings component. According to case details, the complainant's policy commenced on February 1, 1998, with a contractual retirement date set for February 1, 2028. As of 15 June 2024, he had a fund credit of R63,134.74. The fund explained that the Income Tax Act (ITA) excludes legacy policies—defined as pre-universal life and universal life policies—from the new two-component system. The complainant's policy falls within this category, meaning he is not entitled to the benefits of early withdrawals under the new system. She says to ensure compliance with the Financial Services Conduct Authority (FSCA), the fund amended its rules to confirm that legacy retirement annuity policies remain unaffected by the regulatory changes. The fund further explained that the complainant had the opportunity to transfer his policy to a two-component compliant retirement annuity before the deadline of August 1, 2024. Since he did not request a transfer, his policy remains under the legacy framework, making it ineligible for withdrawals. However, if he wishes to benefit from the new system, he would need to reinstate premium payments to start accumulating value in the savings component, allowing him to exercise withdrawals in the future, Lukhaimane says. In her determination, Lukhaimane said it is clear from the fund's submissions that the complainant's policy is exempted from the two-component retirement system in terms of section 1 of the ITA and the fund rules. She said she was satisfied that the fund acted lawfully in terms of its rules, the ITA, and the policy contract in refusing to pay the complainant the withdrawal he requested. The complaint was dismissed. PERSONAL FINANCE
IOL News
06-05-2025
- Business
- IOL News
Pension Funds Adjudicator demands transparency from funds in death benefit disputes
Pension Funds Adjudicator Muvhango Lukhaimane has said that the POPI Act does not prevent the PFA from having access to pension fund investigation reports. Image: Supplied Pension Funds Adjudicator (PFA) Muvhango Lukhaimane has taken a firm stance against funds that withhold investigation reports under the guise of protecting personal information, warning that the Protection of Personal Information Act (POPIA) should not be used to conceal poor investigations. In a recent determination, Lukhaimane made it clear that funds are obligated to share information with the PFA when requested without needing consent from beneficiaries. 'A fund cannot hide behind POPIA,' she said, adding that the PFA qualifies as a public body and 'is allowed to collect personal information when necessary for the conduct of proceedings'. The PFA was dealing with a complaint from the customary spouse of a deceased member of the Eskom Pension and Provident Fund. She was unhappy with the board's decision to award a large portion of the R560 160 death benefit to the deceased's life partner. The board had allocated: 28% each to the spouse and the life partner, 2% to five major children, 30% to one minor child, and 2% each to two other minor children. However, the deceased's nomination form indicated that he wished for 80% to go to his spouse, 10% to his life partner, and 5% each to two children. Lukhaimane ruled that the fund failed to conduct a thorough investigation into the financial dependency of each beneficiary. 'There is a duty on the fund to actively investigate the extent of each of the beneficiaries' financial dependency on the deceased,' she stressed. 'The fund failed to follow the beneficiary nomination. There must be a valid reason for not honouring a nomination.' Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕
