A Kilmartin, acting on behalf of the employer company, said on 4 April 2005 the company had resolved to give notice of its intention in terms of Section 14 of the Pension Funds Act to terminate its participation in the first respondent and have all members' benefits transferred to the Vitae Umbrella Provident Fund administered by Vic Glassock and Associates CC.
The resolution was faxed to the second respondent on 20 June 2005. In July 2007 the complainant became aware that the transfer of the complainant's employees' benefits to the Vitae fund had not been effected when it sought to transfer from the Vitae fund to the Funds At Work Umbrella Provident Fund, administered by Momentum, a division of MMI Ltd.
The complainant further submitted that it had waited for over three years for the first respondent to implement its instruction to effect the section 14 transfer. As a result of the first respondent's delay in effecting the transfer, it suffered a loss of R256,426.15 in investment returns for the period 1 April 2005 to 5 October 2009, based on investment returns from the Vitae fund compared to that of the first respondent.
The complainant submitted that whilst the fund credit in the first respondent was R483,167.13 on 5 October 2009, had it been invested in the Vitae fund under the Allan Gray portfolios it would have achieved higher investment returns and it would have had a fund credit of R739,593.28 by that date.
The second respondent submitted that whilst it was true that the complainant's money could have earned higher returns in Allan Gray than in the fund's chosen portfolios with it as illustrated by Glassock, there were also portfolios available to the first respondent, where the assets could have earned better returns. The second respondent further submitted that the complainant was able to change the chosen portfolios of the fund at any time by written instruction to it.
In her determination, Lukhaimane said the rules of a fund were supreme and binding on its officials, members, shareholders and beneficiaries and anyone so claiming from the fund. The complainant submitted that due notice was given to the second respondent to terminate its participation in the first respondent. "No tenable reasons have been advanced by the respondents for the inordinate delay in effecting the Section 14 transfer to the Vitae fund, save to say that the complainant need not have suffered financial prejudice because it could have elected different portfolios.
"However, as indicated by the complainant, had it known that it was still a participant in the first respondent, contrary to its instruction given to the second respondent some three years before, it would have selected different investment portfolios in it. Nevertheless, the delay in effecting the transfer, which resulted in investment losses, cannot be justified.
"Of concern to this tribunal is the almost cavalier attitude displayed by the second respondent in its responses on a matter where the complainant's employees have suffered losses. Whilst the second respondent is quick to quote its rules in defense of the indefensible, it fails to offer any reason as to why it failed to implement the complainant's written instructions in the first place."
The first respondent was ordered to calculate the complainant's investment return losses as a result of the delay in effecting the Section 14 transfer, calculated from 20 June 2005 to 5 October 2009, and pay the investment returns lost by the complainant together with interest at the rate of 15.5% per annum.
