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In November, the Sanlam Pension Fund had won a court challenge to the FSB ruling.In terms of the court’s decision, improper use of pension fund surpluses can only be backdated to 2001 when the surplus legislation was passed.Former members of other pension funds are waiting for similar decisions, possibly with even greater financial implications, although when they will get clarity remains unclear.In September last year, qualifying ex-employees of Old Mutual received letters informing them of the amount of money they would receive based on the company’s actuarial calculations of the amount of surplus funds that had been improperly used since 1980, based on a guidance note from the Financial Services Board (FSB).However, in response to a Mail & Guardian query, Old Mutual says that it will be making a decision within the next few weeks.This is possibly due to the unhappiness of former employees who want further clarity.
However, the shareholders will ultimately foot the bill.
The surplus debate raises the issue of the different needs of various stakeholders.
On one hand, Old Mutual could save a massive R80-million for shareholders, but on the other, those employees who were expecting, for example, a R20 000 payout would be lucky to come out with R500. Firstly, they could go with the Sanlam ruling, informing members that their payments will be a fraction of the initial amount.
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