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BusinessLive reports that the Constitutional Court (ConCourt) on Wednesday ruled that pension funds cannot simply backdate changes to their rules, however important, without first registering the change with the authorities.
This overturned a previous decision by the Supreme Court of Appeal (SCA). The ConCourt ruling came after a municipal worker found his pension fund payout was less than he expected because the fund changed its rules after his resignation and applied the change retrospectively, but without registering the rule change. Pandelani Mudau was an employee of the Vhembe District Municipality for more than a decade and thus a member of the Municipal Employees Pension Fund. When he resigned in May 2013, he became entitled to withdrawal benefits from the fund in terms of its then rule. The old rule indicated that on resignation he would be entitled to three times his contribution plus interest. However, in June 2013, after the fund was warned in an actuarial report that it would not meet its future liabilities, the administrators amended the rule. Instead of three times, the benefit would now only be one-and-a-half times. The amended new rule was to apply retrospectively from 1 April, almost two months before Mudau’s resignation. In July 2013, the fund applied to the relevant authority to register its new rule, which was only reflected a year later. In October 2013, Mudau received his withdrawal benefit. It amounted to about R650,000 in terms of the new rule instead of about R2.1m in terms of the old rule. Writing on Wednesday, ConCourt judge Jody Kollapen indicated: “Although amended rules may have retrospective effect after registration, they do not have binding effect before registration.”
- Read the full original of the report in the above regard by Tauriq Moosa at BusinessLive
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