A pension fund member expecting twins has won partial compensation after delays in processing his withdrawal claim forced him to take out costly vehicle finance to buy a larger family car.

In a recent ruling, the office of the Pension Funds Adjudicator (PFA) found that the Alexander Forbes Retirement Fund – Preserved Provident Section acted wrongfully and negligently by failing to pay the member’s withdrawal benefit within a reasonable time and by contributing to delays through poor communication and internal co-ordination.

The complainant initially contacted the fund on September 2, 2024, to request a partial withdrawal of his savings, intending to transfer the remaining amount to his Retirement Annuity (RA).

Between September and November 2024, he made repeated attempts to follow up on the status of his claim, including numerous emails and spending more than 250 minutes on hold with the fund’s call centre.

He was eventually paid R554,350 on November 14, 2024, with R115,650 deducted for tax and paid to the South African Revenue Service. However, he said the delay left him with little choice but to arrange external vehicle finance ahead of the birth of his twins, as he needed a larger vehicle to safely transport his soon-to-be three children.

He estimated that the vehicle finance would cost him an additional R300,000 over time. He also incurred about R10,000 in credit card charges to cover medical check-ups after funds initially set aside for those expenses had to be used for the vehicle deposit.

The complainant further stated that he had planned to use his available funds to cover nursery school fees in 2025, but vehicle repayments had significantly strained his budget.

The fund argued that it could not finalise the claim because certain documents, including a Recognition of Transfer (ROT) form, were outstanding from the complainant’s broker.

The complainant rejected this explanation, saying he had handled the claim in his personal capacity and had no broker. He maintained that no document requests were sent to him and that any internal communication failures between related entities should not have prejudiced him.

The remaining portion of R936,88 was eventually transferred to his RA fund on in March 2025, after the required documentation was received.

In its determination, the PFA noted that the withdrawal payment was made more than two months after the claim was lodged and that the transfer form was only sent to the complainant nearly three months after the initial instruction to transfer funds. It also found that the fund’s failure to update the complainant’s correct email address contributed to the delays.

“The fund had a legal duty to pay the complainant’s withdrawal benefit timeously,” the adjudicator said. “The fund did not provide any cogent reason for the delay… Consequently, the fund’s conduct was wrongful and negligent.”

The adjudicator ordered the fund to pay:

50% of the interest incurred on the financing of the new vehicle; and
Interest incurred on medical expenses of R4,841.60 and R5,266.60 that were paid via credit card.

In addition, the complainant’s RA fund was ordered to compensate the pension fund for any investment loss suffered as a result of its delay in processing the transfer. (IOL)

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