Financial services group Old Mutual has finally given some details that led to the company not paying a pension fund after a court ruling. It says this is a complex matter that involves a divorce decree on the pension assets of their customer who retired.
The matter trended on social media after it failed to honor a court ruling to pay a pension payout.
Old Mutual says it was not informed that the customer was divorced when processing his retirement and that at retirement, a portion was taken in cash with the remainder paid into an annuity as required by the Pension Funds Act.
Pre-retirement divorce orders can entitle non-member spouses to a portion of pension assets in a lump sum. In post-retirement, only a portion of the member’s annuity income can be accessed.
The company says it is bound by legislation to follow due processes before settling any claim.
“Pre-retirement divorce orders can entitle non-member spouses to a portion of pension assets in a lump sum, and these would be taxable if they were withdrawn on cash. This is what Mrs Molefi would be entitled to pre-retirement. However, post-retirement, which is the situation we find ourselves in, the allowed format is a portion of the members annuity income,” says Celiwe Ross from Old Mutual.
Old Mutual says they handled the backlash they received from social media as best as they could. They claim that the reason it took long to respond to the negative publicity it received is because the matter is private, and they would not want to contravene the POPI Act.
However, they are now in a position where they could no longer keep quiet.
“There is information that is private and clearly private under POPIA. We have ensured we don’t breach that respect … the company does not discuss in the public domain and I think divorces are often traumatic experiences for families and certainly not something that they would want publicly talk about. We have stuck to that, but unfortunately, we are now in a position where we can just no longer keep quiet about that and we need to lay it out,” says Kerrin Land from Old Mutual.
The company says it has presented two settlement options to the policyholder and is hoping to resolve the matter soon.
“In the meeting, we outlined two potential solutions that would lead to Mrs Molefi receiving her share as per the decree. On the same day, we detailed in writing what these options are. Yesterday, we followed up with detail of what the standard, expected tax impact of each option would be. A correspondence has been handled with Mrs Molefi and that correspondence has been cordial with them requesting clarity wherever it was required. Our team has been fully dedicated and remains so to resolve this issue. It surprises us that Mrs Molefi has put out a view on X suggesting otherwise,” Ross added.
In the last seven days, Old Mutual’s share price has improved by more than 1.3% suggesting that the market may not be too concerned about this matter.
