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Four days since the implementation of the two-pot retirement system, there have been some glitches causing pension fund members who are desperate for their money to complain, but so far the claims process is running smoothly.
Pension fund members have been waiting anxiously to lay their hands on a part of their retirement funds in the savings pot created by the two-pot retirement system, but the news that payouts will only happen later in September was not welcome.
Michelle Acton, retirement reform executive at Old Mutual, says payouts will begin later in September as part of Old Mutual’s two-phased approach to implementing the two-pot retirement system.
However, there is a good reason for this. Acton says given the size and scale of Old Mutual’s operations. It is managing an anticipated volume of over 600 000 applications.
“The goal is ensuring the process is accurate, secure and efficient for all our clients.”
As part of the first phase, Old Mutual completed the seeding process which allows clients to view their pot balances and obtain quotes via its WhatsApp channel.
“This phase helps us to ensure that all systems are fully aligned and functioning properly.”
In the second phase, starting on 23 September, Old Mutual will accept and process withdrawal applications. Acton says this approach allows them to resolve any potential issues early on and ensures that once payouts start, they are handled smoothly and consistently across a large client base.
“We strongly encourage clients to update their personal details if they have not done so already. If you have not heard from your fund administrator, it is possible they are unable to reach you. Ensuring your details are up to date is crucial for a smooth withdrawal process.”
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John Anderson, an executive for solutions and enablement at Alexforbes, says Alexforbes already started to receive and process withdrawal applications on Tuesday.
“We expect a high number of savings pot withdrawal claims, somewhere between 3 and 6 times the annual number of claims we normally process but handling this volume in a much shorter space of time.
“Given this exceptionally high volume of claims, as well as the fact that the introduction of the two-pot retirement system is a significant change in the industry and our operating environment, we anticipate initially that the processing timeframe is up to 20 working days from the full completion of each withdrawal application.”
He says Alexforbes will in time review the turnaround times, but in the meantime, the company asks all members to please be patient while their claims are processed.
“In addition, given the high volume of claims, they may not be able to access our digital platform (due to limitations on the number of individuals that can be assisted at any given time).
“Therefore, we are requesting members to try again at a later time if they are unable to access the digital platform.”
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Anneke Hanekom, head of reputation and CEO projects for the Momentum Group, says Momentum has so far received 777 withdrawal submissions, which is 0.3% of its in-force retirement contracts. All the submissions are digital.
“Although it is difficult to accurately predict volumes, the numbers we are seeing are lower than expected.”
She says Momentum’s system is fully integrated with South African Revenue Service’s (Sars) system and they are receiving tax directives. “We completed a number of payments already (3%) which were mostly for claims submitted on Sunday.
“Speed of payment differs, because it depends on many things, such as the volumes we receive, whether people are in good standing with Sars, or whether their forms are completed accurately. Depending on the circumstances per case, it can take anything between 2 to 20 days for a claim to be paid.”
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Michelle Moller, Sanlam Business Head: Business Shared Services, says Sanlam believes the new two-pot retirement system will provide much-needed relief for clients who may experience financial emergencies, while also encouraging preservation of retirement savings.
“In support of this, we adjusted all our business administration systems to enable us to receive and process two-pot withdrawal requests.
“Contrary to a transactional withdrawal process, the two-pot retirement system withdrawal process is linked to long-term retirement provision and presents specific legislative and tax requirements for a withdrawal to be made, including the submission of a tax reference number, confirmation of banking details and provision of annual income.”
She says Sanlam can process a withdrawal request as soon as a client completes its online withdrawal application process or sends in a completed withdrawal application form along with the required information.
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The legislation then requires the administrator, like Sanlam, to request a tax directive from Sars indicating the amount of tax which should be deducted before payment can be made to the client. “While Sars tested its tax directive system over the last couple of weeks, the practical experience of the requirement to process large volumes of tax directive requests will now become evident and efficiencies in this context will affect the timing of the process to finalise payments.”
As soon as Sanlam receives the tax directive response, it processes the final step and pays the money into the bank account of the client as soon as possible. “Therefore, whereas a transaction withdrawal process usually concludes within a couple of days before the money appears in the bank account of the client, a two-pot withdrawal presents an extended process and will take longer.”
Sanlam also had large numbers of clients enquiring about the two-pot retirement system withdrawals since the implementation of the system on 1 September on several secure web platform channels as well as Sanlam’s call centres, she says.
“Although the high volumes have brought about congestion and placed significant pressure on teams across the business, all Sanlam systems remain functional. Sanlam deployed additional resources to prepare for the implementation of the two-pot retirement system and while this helped, the incoming volume of engagement remains high.”
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Siphamandla Buthelezi, head of platforms at financial advisory firm NMG, also says the process of claims has already started and going seamlessly. “We received over 1 500 claim applications since Tuesday morning through the WhatsApp system and claims are now going through the next stages of approvals. Depending on asset managers for different funds, payment will likely happen between 5 – 10 business working days.”
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