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Bulking FAQs
What
is Bulking?
Alexander Forbes has committed to
offer a settlement amount in respect
of the non-disclosure of fees
received from bulking of fund
current accounts to September 2004
when Alexander Forbes ceased to
receive income from this practice.
Bulking is the term used to describe
the practice of the notional
aggregation by Alexander Forbes of
the Fund’s current account balance
together with the current account
balances of other retirement funds
administered by Alexander Forbes in
order to secure a preferential rate
of interest from the bank concerned.
The fund therefore earned a better
rate of interest than they would
have done had the banks treated the
funds’ account in isolation. Our
retirement fund clients have
benefited significantly over the
years from this practice and
continue to do so.
From 1996 to 2004 Alexander Forbes
earned income from the banks for
“bulking”, this ended in 2004. Due
to disclosure requirements not being
complied with in relation to the
income that it earned Alexander
Forbes decided to pay the income
earned from bulking to the relevant
funds. In this regard a factual
findings report was prepared by
independent auditors, Ernst and
Young.
When
did Alexander Forbes receive an
amount in respect of Bulking?
This took place between 1996 and
September 2004.
What
is the process to distribute Bulking
Allocations?
Alexander Forbes has presented and
agreed a settlement offer to the
board of Trustees of the fund. The
trustees of the fund have decided
upon a method of distribution of the
settlement monies from the fund. The
decision to distribute to active
and/or former members of the fund is
made by the Trustees and may differ
from fund to fund.
Once this decision is made, and
dependant on the trustees’ decision,
persons who were active members of
the fund between 1st June 1996 and
30th September 2004 may be eligible
to receive a share of the bulking
settlement. (Note that the Trustees
decide how the settlement offer gets
distributed and to which
members/former members)
How
will funds be paid to individual
members?
This will be entirely dependent on
the decision by the Trustees and
will differ from fund to fund,
however if the Trustees decide to
distribute the proceeds of the
bulking settlement it will take
place as follows:
a) If you are still an active member
on the fund, and the trustees have
decided to make an allocation to
active members, it is likely that
your current fund credit will be
increased in line with the method of
calculation decided by the trustees.
(Benefit statement will reflect this
as an enhancement.) Active members
could only receive this when they
leave the fund.
b) If you are a former member and
the trustees have decided to make an
allocation to former members, you
will have to complete a Bulking
Application Form which will have to
be posted back to Alexander Forbes
with original certified copies of
your ID, proof of banking details
and proof of membership to the fund.
(To request an application form
please complete the below online
request form).
As a
former member, when will you receive
payment?
a) Fund has already started making
payments: You should receive payment
within 21 working days once all the
required documentation has been
received.
b) Fund has not already started
making payments: We cannot confirm a
turnaround time for payments at this
stage.
c) Former members/ members: Trustees
decided not to make individual
payments to members/former members:
The Trustees of the fund took a
decision not to distribute the
bulking settlement monies to
individual members/former members
thus they will not be receiving
bulking payments from this fund
Will
I receive interest?
Yes, members will receive interest
calculated at the prevailing rates
which is calculated from the date
the trustees decided to distribute
the settlement monies to individual
members.
What
amount will I receive?
At the moment the exact amount
cannot be confirmed as the interest
calculation will need to be added to
the amount.
Will
the amount be taxed?
If your fund has amended its rules
to provide for the bulking
distribution it will not be taxed.
N.B. University of KZN: Yes the
Allocation has been taxed as there
was no rule in place to cater for
these benefits to be tax free. A tax
certificate can be generated for
you.
How
was my allocation calculated?
These allocations were reviewed and
accepted by the fund’s trustees. |
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