CASE NO: NBFIT – 0013/2023
APPLICANT 13 V. NBFIRA
CASE NO: NBFIT – 0013/2023
Sector - Retirement Funds
1. Issue
1.1. Withdrawal of the remaining two-thirds balance of pension benefits after retirement and purchase of annuity, whether permitted by law;
1.2 Applicant retiring under the repealed Retirement Funds Act, 2014 and executing an Annuity Pension Policy Contract thereby purchasing an annuity;
1.3 Annuity Pension Policy Contract providing that the contract expires on the death of the pensioner and that it may not be surrendered or terminated.
2. Summary of Facts
2.1. In the matter between Applicant 13 v. NBFIRA case number NBFIT-0013/2023, the Applicant lodged her appeal against the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) after it refused to allow her appeal against Bona Life Insurance (Pty) Ltd (Bona Life). The Applicant had requested Bona Life to allow her to withdraw the entire remaining balance of her pension after purchasing an annuity and receiving a monthly pension. The Applicant wanted to use the pension benefit to settle a loan with Access Bank amounting to P 282, 890.37 (Two Hundred and Eighty-Two Thousand, Eight Hundred and Ninety Pula Thirty-Seven Thebe).
2.2. Bona Life declined her request on the basis that she had already encashed her one-third benefit on retirement in accordance with the Retirement Funds Act, 2014, the Fund Rules and the Income Tax (Superannuation Funds) Regulations, and had used the remaining two-thirds to purchase an annuity in terms of which she was already receiving a monthly pension of P 8, 178.00 (Eight Thousand One Hundred and Seventy-Eight Pula).
2.3. The Authority dismissed her appeal.
3. Issues for Determination by the Tribunal:
3.1 Whether or not there exists a valid Annuity Pension Policy Contract as between the Applicant and Bona Life;
3.2 Whether a retired person who has purchased an annuity and receiving a pension still has an option to withdraw the remaining balance of the two- thirds used to purchase the annuity, thereby terminating the annuity policy contract.
4. Relevant Provisions of the Law
4.1. Retirement Funds Act, 2014
Section 40(1)(a)
A licensed fund may deduct from a benefit payable to a member, or to his or her dependents or nominees, in the event of the death of the member –
(a) Any amount due on the benefit in terms of the Income Tax Act;
4.2. Retirement Funds Regulations, 2014
Regulation 28
(1) A pension shall be payable for the lifetime of the-
a) beneficiary if the beneficiary is the member, or
b) survivor of the member or his or her spouse if the pension is a joint- life pension.
(3) A pension may be outsourced through the purchase of an annuity policy, provided the policy adheres to sub regulations (1), (2), (4), (5) and (6), and shall transfer all obligations from the fund in respect of the retiree to the insurer and the fund shall have no further obligations in respect of the retiree.
(4) The member may select the type of annuity policy, guarantee period, and any provisions from pensions payable to a surviving spouse after death of the member, the provision for pension increases, and the insurer from which the policy is purchased.
(5) ………………………………………
(6) The retiree shall have a 21-day period after signing the application in which he or she can require the annuity policy to be cancelled and all moneys paid to another retirement annuity within 30 days of cancellation.
Annuity Policy Contract (Policy Wording)
Section 11(d)
“Changes to the annuity contract are not permissible.”
5. Tribunal Judgment
The Tribunal dismissed the application for the following reasons:
5.1. Neither the Retirement Funds Act nor Regulations permitted cancellation of an annuity policy once purchased. As a result, the Applicant’s request for payment of her pension benefit in full could not be granted.
5.2. The Applicant as a pensioner had no option under the applicable Retirement Funds Act, 2014 and its Regulations to request for any retirement benefit encashment. On purchasing the annuity and receiving a pension, the governing framework for the relationship between the Applicant and Bona Life was the extant Annuity Pension Policy Contract which provided that changes to the annuity contract were not permissible.
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