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MONEY CLINIC: Is the penalty for moving my retirement savings too high?

Feb 13 2019 06:00

Have a money problem that needs solving? Fin24 can help! This month our focus is on savings and how to better manage your budget. Send your question to editor@fin24.com or find the Money Clinic box on the right of our homepage.

QUESTION: I have a retirement annuity fund investment with a group catering specifically for graduate professionals. I have been contributing religiously since university for about 15 years already. It has had a growing, albeit small, monthly contribution (based on what I could afford when I was a student).

This is not my main retirement savings nest egg and I want to simplify and reduce my number of investments. The market value of my retirement annuity fund is now about R65 000.

To access the funds sooner, I had to pay a penalty of R8 774 and now upon wanting to transfer this investment in terms of section 14 of the Pension Funds Act to another fund (with lower fees and more investment flexibility), I'm told the total penalty will be R11 860.

Surely this can't be right? A penalty equal to 18% of my investment value... can I take this up with anyone to assess the fairness of the penalty levied? What is your advice?

ANSWER: Lorna Harrington and Carel Basson of Alexander Forbes gave the following guidelines: Each investment contract concluded with any investment company, will be unique and it will therefore be necessary to first make sure of the contents of the specific agreement. Unfortunately we cannot speculate without having insight into such an agreement. There are various Ombudsman offices (usually statutory bodies) that look at disputes between providers of financial services and their clients. Their services are free. It seems that the Fais Ombudsman or the Pension Fund Abjudicator might be the relevant ones to contact with this query. If unsure which Ombud to contact, you can phone the Financial Ombudsman call centre at 0860 662 837 and they will direct you to the relevant Ombudsman Office.  

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