Retired employee wins pension recalculation after R2.5 million shortfall.
A pension fund has been ordered to recalculate a retired employee's pension benefits after the Office of the Pension Funds Adjudicator (PFA) found that the lump sum it provided was insufficient to secure the guaranteed pension promised under the fund's own rules.
In a ruling issued by Deputy Pension Funds Adjudicator Naheem Essop, the ZF of South Africa Pension and Group Life Assurance Fund was directed to set aside its calculation of the complainant's retirement benefit and determine the capital amount required to secure the pension defined in the fund's rules.
The dispute arose after the complainant, who worked for ZF Services South Africa (Pty) Ltd from April 1995 until his retirement in October 2023, challenged the amount paid to him upon retirement. Under the fund's rules, his annual pension was calculated at over R1.3 million equivalent to over R112,000 per month, based on his years of pensionable service and final salary.
Rather than paying the pension directly, the fund opted to provide a capitalised lump sum of R14 million enabling the retiree to purchase an annuity from a registered insurer.
