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THE FINANCIAL SERVICES TRIBUNAL

 

CASE NO: PFA23/2023

 

 

In the matter between:

 

DR MANOSHNI PERUMAL                                           Applicant

 

and

 

NATIONAL TERTIARY RETIREMENT FUND             First Respondent

 

DURBAN UNIVERSITY OF TECHNOLOGY               Second Respondent

 

THE PENSION FUNDS ADJUDICATOR                     Third Respondent

 

 

Summary: Reconsideration of a decision of the Pension Funds Adjudicator (30M) in terms of Section 230 of the Financial Sector Regulation Act 9 of 2017-eligibility for “conditional retirement benefit” in terms of the Fund Rules.

 

 

DECISION

 

 

Introduction

 

[1]             The Applicant, Dr Manoshni Perumal is a former employee of the Durban University of Technology in which she was employed from 13 April 1987 until her early retirement on 30 April 2022. During the Applicant’s employment she was a member of the Associated Institutions Pension Fund (“AIPF”) from 13 April 1987 until 30 November 1994. She was one of higher education employees who transferred from the AIPF to the National Tertiary Retirement Fund which she officially joined as a member on 1 December 1994. On the establishment of the National Tertiary Retirement Fund on 1 December 1994, a set of fund rules were in force with effect from that date (“the 1994 Rules”). Of particular significance about her membership is that under rule 4.6 of the 1994 Rules, a member was entitled to receive a “guaranteed minimum benefit” on retirement[1]. The 1994 Rules were thereafter duly amended over time in the following years. Notably, the “guaranteed minimum benefit” as described in rule 4.6 of the 1994 Rules was later amended[2]. The amended rules altered the terms of the “minimum retirement benefit” and stated that in terms of such amendment, the minimum benefit would be distributed to the Transferred Members on retirement subject to certain conditions being fulfilled. The main condition was that any additional amount required to provide the minimum benefit would be paid provided it was funded by the applicable participating employer. Such benefit was referred to as the “conditional retirement benefit” as described in rule 9.5 of the Current Rules. As the National Retirement Fund Rules were amended the “guaranteed minimum benefit” became known as the “conditional retirement benefit”. The latter forms the subject matter of this application.

 

[2]             The First Respondent is the National Tertiary Retirement Fund (“the Fund”).

 

[3]             The Second Respondent is the Durban University of Technology and is the participating employer in the Fund.

 

[4]             The Third Respondent is the Pension Funds Adjudicator as defined in the Pension Funds Act 24 of 1956.

 

[5]             The application is in terms of Section 230 of the Financial Sector Regulation Act 9 of 2017 and concerns the reconsideration of the decision taken by the Third Respondent in terms of Section 30M of the Pension Funds Act 24 of 1956 (“the PFA”).

 

[6]             The parties have waived their right to a formal hearing, and the matter was determined on papers. This is the decision of the Tribunal.

 

[7]             Section 230(1) of the Financial Sector Regulation Act 9 of 2017 (“the FSR Act”) provides the basis for the Applicant to lodge this application for consideration and seek an appropriate relief under sec 234(1).

 

[8]             We turn to consider the merits of the present reconsideration application.

The following are the common cause facts:

 

[8.1] The Applicant took an early retirement from her employment on 30 April 2022 and the Fund refused to pay her a “conditional retirement benefit”. Aggrieved by the decision of the Fund, the Applicant lodged a complaint with the PFA. The PFA dismissed her complaint. She now turns to this Tribunal for reconsideration of the PFA’s dismissal of her complaint concerning the Fund’s alleged non-payment of a “conditional retirement benefit”.

 

[8.2] On the common cause evidence, the Applicant officially exited the Fund in June 2022 when she was 55 years and 3 months of age at the time. In her application, the Applicant submitted that the Second Respondent’s policy permitted her to take an early retirement. She says her ‘Condition of Services’ document specifies the retirement age as 55 years of age. She further referred this Tribunal to the Second Respondent’s Exit and Termination Policy and her Condition of Service[3].

 

[8.3] The Fund stated that the Current Rules were in force and effective upon the Applicant’s retirement date. In that regard, it provided a copy of its Current Rules.

 

[8.4] In rule 9 the Current Rules provide for payment of various benefits to members upon their retirement, and in certain cases, this includes the so- called “conditional retirement benefit”.

 

[8.5] Rule 9.5 regulates a member’s potential entitlement to, and the payment of, the “conditional retirement benefit”. It provides as follows:

 

“9.5 CONDITIONAL RETIREMENT BENEFIT

 

9.5.1              This Rule 9.5 will apply to a MEMBER (i) who is 60 (sixty) years of age or older, (ii) who was a member of a PREVIOUS FUND immediately prior to the COMMENCEMENT DATE and who chose to have his or her interest in the PREVIOUS FUND transferred to the FUND on the COMMENCEMENT DATE and

(iii) who is not:

 

9.5.1.1            a CATEGORY C MEMBER;

9.5.1.2            a CATEGORY D MEMBER;

9.5.1.3            a PAID-UP MEMBER;

9.5.1.4            a MEMBER who is entitled to a PENSION in terms of Rule 7 on account of disability; or

9.5.1.5            a MEMBER who is entitled to PENSION in terms of Rule 9.3 on account of ill-health retirement; or

9.5.1.6            a MEMBER who has exercised an investment choice in terms of Rule 15.16 at any time.

 

9.5.2              A MEMBER who was [a] previously a member of the Associated Institutions Pension Fund, the Government Services Pension Fund or the Authorities Services Pension Fund, is entitled to a benefit comprising:…” (emphasis supplied)

 

[8.6] It is worth noting the clearly stated conditions, eligibility requirements and benefit provisions applicable to the “conditional retirement benefit” as set out in rule 9.5 which may be payable in terms of the Current Rules. One such condition states that a member must be 60 years of age or older at the time of retirement. Since the Applicant was 55 years of age when she retired, she clearly fails to meet the first threshold eligibility requirement. It follows that the Applicant does not meet the “conditional retirement benefit” set out in rule 9.5.1.

 

[8.7] The Applicant’s age at the time of exiting the Fund rendered her ineligible to receive the “conditional retirement benefit” on retirement, in terms of the Current Rules. Copies of the benefit statements provided annually to the Applicant communicated this position.

 

[8.8] The Applicant’s normal retirement age was 65 years. Her normal retirement date was the last day of the month in which she reached age 65. Accordingly, she qualified under Rule 9.2 for a “benefit payable on retirement at a date earlier than the normal retirement date of a member”.

 

[8.9] Rule 9.2.1 specifies that, in the given circumstances, the Applicant was entitled to a benefit as contemplated under Rule 9.1.1.1. That rule gave the Applicant the option to require the Fund to purchase an annuity policy in her name from a registered insurer.

 

[8.10] On 1 June 2022 and in accordance with rule 9.1.1.1 of the Current Rules on retirement, the records show that the Applicant completed and signed an election form where she instructed the Fund to purchase a retirement annuity policy in her name. Her election was duly implemented by the Fund[4].

 

[9]             A pension fund is bound by its rules. The Fund's Current Rules are its constitution, and it can only act in accordance with its rules. The Act dictates that a fund may only distribute the Applicant’s retirement benefit in the manner authorised by the rules. The retirement benefit may not be distributed in a manner which conflicts with the rules.

 

[10]       The PFA was correct in dismissing the Applicant’s complaint. In our view, the First Respondent acted in accordance with its Current Rules and its conduct cannot be faulted. Similarly, there is no basis for interfering with the PFA’s determination.

 

CONCLUSION

 

[11]       On the papers filed with the Tribunal, we find that the Applicant has not established a case to justify a reconsideration of the decision by the PFA. The PFA carefully considered the complaint and came to the correct conclusion. In our view, the PFA’s reasoning and conclusion cannot be faulted.

 

[12]       In the circumstances, the Tribunal can find no grounds to interfere with the decision of the PFA.

 

ORDER

 

[13]       The application for reconsideration is dismissed.

 

 

Signed on behalf of the Tribunal on 15 September 2023.

 

 

Zama Nkubungu-Shangisa

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