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Former Absa Employee Denied Access to R7.3 million Pension Fund Amid Financial Hardship
A former Absa employee, Hermann Matthysen Shaw, is taking legal action against the bank after being denied access to a portion of his R7.3 million pension fund. Shaw, who worked for Absa from January 1989 until his retirement in April 2022, had expected more flexibility in accessing his funds after retirement.
At the time of his retirement, Shaw chose to receive an in-fund pension, also known as a living annuity. With a pension value of over R7.3 million, Shaw was entitled to take a lump sum of R2.3 million, which was one-third of the total amount. However, he only withdrew R800,000 and invested the remainder in a living annuity.
Also read: Pension Fund Drama: Woman Loses Case Over R21 Million Provident Fund
Months after his retirement, Shaw encountered financial difficulties and sought to withdraw R650,000 from his living annuity. However, the bank refused his request, prompting Shaw to take the matter to the Pension Funds Adjudicator (PFA). Unfortunately, his application was dismissed, which led Shaw to challenge the decision further with the Financial Services Tribunal (FST).
Shaw argued that the PFA had not considered his financial hardship and that he had not been clearly informed about his withdrawal options upon retirement. According to Shaw, the retirement meetings he attended were not sufficiently clear regarding his entitlement to withdraw funds after retirement, and he felt pressured to sign the retirement documents during the Covid-19 period.
In response, Absa produced evidence showing that they had communicated Shaw’s options through multiple channels, including phone calls, emails, and MS Teams. According to the bank, Shaw had been informed that once he selected a living annuity, he would not be able to change the option or withdraw further funds. Absa also emphasized that complying with Shaw’s request would violate the Income Tax Act and the Pensions Fund Act.
After reviewing the case, the FST ruled that the PFA’s decision against Shaw was justified and dismissed his application, leaving Shaw without access to additional funds from his pension.
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