LEGAL UPDATE FAW 16/2009: MOMENTUM UNCLAIMED BENEFITS PENSION AND PROVIDENT PRESERVATION FUNDS

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1 15 September 2009 LEGAL UPDATE FAW 16/2009: MOMENTUM UNCLAIMED BENEFITS PENSION AND PROVIDENT PRESERVATION FUNDS The Mmentum Unclaimed Benefits Pensin and Preservatin Funds were registered by the Financial Services Bard and apprved by the Cmmissiner fr the Suth African Revenue Services and are nw in a psitin t start peratins. Registratin and apprval details f these Funds are as fllws: Mmentum Unclaimed Benefits Pensin Preservatin Fund Mmentum Unclaimed Benefits Preservatin Fund FSB registratin number 12/8/ /8/37804 SARS apprval number 18/20/4/ /20/4/42128 Transfer rule Rule 7.1 Valuatin exemptin Granted n 14 July 2009; valid until 30 June 2011 Until therwise advised, transfers int these Funds will nt be dne via sectin 14, but the Recgnitin f Transfer-prcess will be fllwed instead. All mneys will be invested in the Trustee Chice Prtfli, which currently is the Mmentum Secure Bnus prtfli (MSB). The fllwing fee structure applies t the Funds: Administratin fee Fund expenses Asset management fees First R500,000 f member assets: 0.25% f assets (plus VAT) (per member) per annum Balance f assets: % f assets per member per annum, with a maximum f R900 MSB: 1.25% f assets per annum Paragraphs 1, 3, 4 and 6 f the Secnd Schedule t the Incme Tax Act have been amended as fllws frm 1 March 2009 with regards t unclaimed benefits: Paragraph 1: includes an amunt transferred t an unclaimed benefits fund that was subject t GN35 tax in E f Frmula B. Paragraph 3: where any lump sum benefit is paid t a pensin preservatin fund r a prvident preservatin fund as an unclaimed benefit, n lump sum shall be deemed t accrue. This prvides fr tax-free transfers int unclaimed benefits funds. Paragraph 4: a withdrawal benefit shall, subject t paragraph 3, be deemed t accrue n the earlier f the date n which the member elects t have the benefit paid t them; the date n which the benefit is transferred t anther fund; r the date f their death. Paragraph 6: GN35 tax previusly paid will qualify as a deductin. Page 1 f 5

2 The effect f these prvisins is that althugh GN35 tax is payable n benefits that accrued t members where the exit event ccurred prir t 1 March 2009, benefits accruing after 1 March 2009 will nt be subject t GN35 tax. The mst relevant prvisins f the Rules f the Funds are as fllws: 1. DEFINITIONS DEFINED TERM ASSET MANAGEMENT FEES BENEFICIARY DISINVEST FINANCIAL YEAR FUND BENEFIT MANAGEMENT FEES DEFINITION Any fee charged by any individual / prtfli management cmpany appinted by the Trustees t manage the assets f the Fund, his dependants r nminated beneficiaries entitled t benefits frm Ntificatin t investment manager t initiate disinvestment f S benefit frm market. When investment manager cnfirms finalisatin f disinvestment prcess, the benefit will be depsited int Mmentum s bank accunt. Disinvestment is t be dne within 10 wrking days, except when circumstances beynd Mmentum s cntrl results in unfreseen delays; then it shall be effected as sn as reasnably pssible. Each 12 mnth perid ending n 30 June. Amunt transferred frm S pr rata share f MANAGEMENT FEES tracing csts S pr rata share f ASSET MANAGEMENT FEES plus investment return. Admin fee Bank charges Valuatin csts Audit csts Asset management fees Fidelity Guarantee cver Independent Trustee & Principal Officer remuneratin FSB levies & fees Cmmissin r advisry fees Such ther csts as the Trustees may determine., his dependants r nminated beneficiaries, in respect f whm an UNCLAIMED BENEFIT has been transferred t the Fund. Pensin Apprved pensin fund r pensin preservatin fund. Apprved prvident fund r prvident preservatin fund. Member f t whm benefits became payable under the. Page 2 f 5

3 UNCLAIMED BENEFIT WITHDRAWAL NOTIFICATION Pensin Funds Act definitin (a) a benefit, ther than a benefit referred t in paragraphs (b), (c) and (d), nt paid by a fund t a member, frmer member r beneficiary within 24 mnths f the date n which it, in terms f the rules f the fund, became legally due & payable; (b) a benefit payable as a pensin / annuity, which has nt been paid by a fund t a member, frmer member r beneficiary within 24 mnths f i) the expiry f the guarantee perid fr pensin payments prvided fr in the rules f the fund; r ii) the date n which any pensin / annuity legally due & payable in terms f the rules f the fund became unpaid; (c) surplus benefit payable t frmer member that cannt be traced - nt paid within 24 mnths after surplus apprval; (d) any benefit that remained unclaimed / unpaid t a member, frmer member r beneficiary when a fund applies fr cancellatin r registratin r where the liquidatr is satisfied that benefits remain unclaimed / unpaid, excluding (aa) sectin 14 transfer, where annuity is purchased ir pensiner r therwise in terms f the Act; (bb) death benefit payable t a beneficiary it s37c nt paid within 24 mnths frm date f death f member. Withdrawal benefit submissin f a duly signed withdrawal frm in specific frmat. Retirement benefit submissin f a duly signed retirement frm in specific frmat. Death benefit ntificatin f death. 2. INFORMATION TO BE PROVIDED TO FUND REGARDING INFORMATION REQUIRED Name f fund Cntact details f persn respnsible fr transfer. BENEFICIARY Name Id number Date f birth Latest cntact details & address. Participating emplyer ir member f Name Latest cntact details & address. Emplyer reference number / emplyee number Nrmal Retirement Age in terms f the S rules. Page 3 f 5

4 Benefit frm Type f benefit (death, withdrawal, retrenchment, retirement) Date benefit became claimable / payable Value f benefit n date f accrual Current value f benefit being transferred Recnciliatin f benefit n accrual and current benefit Where unclaimed benefits tax has been paid by the PREVIOUS FUND in respect f the benefit: the details theref and the IRP5. 3. BENEFITS TYPE BENEFIT General Benefit will becme payable if - Claim is accepted by Trustees as valid, r Member is traced. Withdrawal Member wh is nt bliged t retire will be entitled t take his FUND BENEFIT as a lump sum withdrawal benefit. He may elect - cash; transfer t Pensin Apprved pensin fund, pensin preservatin fund r RA Apprved pensin fund, prvident fund, prvident preservatin fund r RA; prtin in cash, transfer balance t Pensin Apprved pensin fund r RA; Apprved pensin fund, prvident fund r RA; transfer Pensin prtin t apprved RA and balance t apprved pensin preservatin fund; prtin t apprved RA and balance t apprved prvident preservatin fund. Retirement Where UNCLAIMED BENEFIT transferred frm = resignatin benefit + has already reached the age f 55: may elect t use FUND BENEFIT t purchase annuity in his name frm an insurer. Where UNCLAIMED BENEFIT transferred frm = retirement benefit: FUND BENEFIT will be used t purchase annuity in S name frm an insurer. May prir t retirement elect t cmmute s much as is permitted by SARS fr a lump sum. Fund has n liability after purchase f annuity. Death FUND BENEFIT paid t estate. Page 4 f 5

5 All enquiries pertaining t the Mmentum Unclaimed Benefits Pensin and Preservatin Funds can be addressed t Kareen Venter at Kareen.Venter@mmentum.c.za. Hettie Jubert Legal adviser at BenefitsAtWrk Mmentum Disclaimer: The infrmatin cntained in this dcument is nt intended t be legal, tax, r ther prfessinal advice. With respect t the cntent f this dcument, Mmentum Grup Ltd des nt make any warranty, expressed r implied r statutry, abut the accuracy, cmpleteness, r usefulness f any infrmatin disclsed herein. Any reliance by yu upn any such infrmatin btained in this dcument is at yur sle risk. Finally, in n event will Mmentum Grup Ltd be liable t anyne fr any direct, indirect, special r ther cnsequential damages fr any use f infrmatin btained in this dcument, including lst prfits, business interruptin, r therwise. Page 5 f 5