A retirement fund member who experienced prolonged delays in accessing part of his retirement savings has been awarded partial compensation after the Pension Funds Adjudicator found that the fund failed to pay his withdrawal benefit timeously.
The complaint concerned the Alexander Forbes Retirement Fund – Preserved Provident Section and the Alexander Forbes Retirement Income Solution Fund.
The member said the delays forced him to obtain external vehicle finance while preparing for the arrival of twins, placing his family under financial and emotional strain.
According to the Adjudicator’s determination, the complainant first contacted the fund on 2 September 2024 to request a partial withdrawal from his preserved provident fund. The balance of the benefit was intended to be transferred to his retirement annuity (RA).
Between September and November 2024, he made numerous attempts to obtain updates on the claim, including sending repeated emails and spending more than 250 minutes on hold with the fund’s call centre.
The complainant said he was repeatedly informed that the claim remained “in progress” and that information was outstanding from a broker, even though the claim had been handled by him personally without an adviser.
A withdrawal benefit of R554 350 was eventually paid to the complainant on 15 November 2024, with R115 650 paid to the South African Revenue Service in respect of tax.
The complainant argued that the lack of timely information prevented him from making informed financial decisions.
He said the delay forced him to finance the purchase of a larger vehicle needed to transport his growing family, resulting in an estimated additional cost of about R300 000 over the life of the loan.
He also incurred credit card charges after funds originally intended for medical check-ups had to be used as a vehicle deposit. In addition, he said the change to his financial plans affected his ability to fund nursery school fees for 2025.
Recognition of Transfer process
The fund submitted that it was unable to finalise the claim because certain documentation remained outstanding, including a Recognition of Transfer (ROT) document from the receiving RA fund.
According to the fund, the ROT was sent to the receiving fund on 8 October 2024, with reminders issued on 24 October and 1 November 2024.
The receiving fund subsequently raised queries and requested additional documentation on 4 November and 11 November 2024, including documents required in terms of the Financial Intelligence Centre Act.
However, the Adjudicator noted that the relevant transfer documentation was only sent to the complainant on 2 December 2024, nearly three months after the initial instruction to transfer the benefit.
The determination further recorded that the communication was only sent to the complainant’s correct email address on 12 December 2024, indicating that the fund’s failure to update its records contributed to the delay.
Adjudicator’s findings
The Adjudicator found that the complainant’s withdrawal benefit had been paid approximately two months after the claim was submitted.
“It is clear that the fund failed to timeously pay the complainant’s benefit in terms of the service level standard,” the determination stated.
The Adjudicator further held that the fund had a legal duty to ensure that withdrawal benefits are paid within a reasonable timeframe and that the explanations provided did not justify the delay.
“The fund did not provide any cogent reason for the delay in paying the complainant’s withdrawal benefit. Consequently, the fund’s conduct was wrongful and negligent,” the Adjudicator said.
Following receipt of the required documentation, the fund transferred R936 882.13 to the receiving RA fund on 13 March 2025.
The Adjudicator noted that the paying fund had indicated that it was reliant on feedback from the receiving fund to complete the transfer and that this feedback was only received approximately five months after it had first been requested.
The Adjudicator ordered the paying fund to compensate the complainant by paying:
- 50% of the interest incurred on the vehicle finance, and
- the credit card interest relating to medical expenses of R4 841.60 and R5 266.60.
The receiving RA fund was ordered to compensate the paying fund for any investment loss suffered because of the delay in completing the transfer.
