In a recent ruling, the Supreme Court of Appeal has confirmed that if you make a complaint to the Pension Funds Adjudicator, it does not have to be precisely phrased to meet the requirements of the law; and if you have a life assurance retirement annuity you are entitled to complain to the adjudicator

But the Supreme Court also ruled that life assurance companies are allowed to apply what are called market level adjusters (MVAs) if you retire before a contracted date when markets are down.

MVAs are applied to capital guaranteed smoothed bonus investment portfolios, which smooth out market volatility However, in times of severe market depression, the market value of your retirement savings could be less than the guaranteed value.

In such a case, you receive the lower value, with the difference between the two being the MVA.
TWO COMPLAINTS

The Appeal Court case arose from two complaints in which the then adjudicator, Vuyani Ngalwana, in 2004 ruled in favour of complaints by Rajwantha Mungal, who was a member of Old Mutual's Protektor Preservation Provident Fund, and Trevor Freeman, who was a member of Old Mutual's South African Retirement Annuity Fund.

Ngalwana ordered Old Mutual to pay R29 592 to Mungal and R46 635 to Freeman.

Old Mutual appealed to the Cape High Court on the grounds that the Freeman and Mungal complaints were not proper; that if they were proper, they should have been directed to the Ombudsman for
Long-term Insurance, because the underlying investments on which the MVAs were applied were life assurance policies; and that it was entitled to apply the MVAs.

The High Court found against Old Mutual on the first two arguments but in its favour on the right to apply the MVAs. The High Court judgment was upheld by the Appeal Court.

BRUCE GAMERON