When a member decides to transfer their retirement savings from one approved fund to another or when a member purchases a monthly pension (typically when they change jobs or reach retirement age), there’s a process you need to follow. Understanding the intricacies and potential pitfalls of this process can significantly improve the efficiency of transfers – and we are here to help.

Let’s start with a simple, step-by-step breakdown of the process:

STEP 1: Submitting a claim instruction: You or your client notifies us of the intention to transfer money to a new fund via the MyClaim digital platform. The claim instruction must include a completed and signed new business application form (or forms, if there are multiple transfers).

STEP 2: Notifying the receiving entity: You or your client sends the abovementioned new business application form(s) to the receiving entity, thereby notifying them of the intended transfer.

STEP 3: Sending a Pre-Directive ROT: We send a Pre-Directive Recognition of Transfer (ROT) to the receiving entity, informing them that we have received an instruction from a client to transfer an amount to one of their funds/annuity products. The receiving entity must then confirm their acceptance of the intended transfer, as well as the bank account details.

STEP 4: Processing the claim: Once the receiving entity has confirmed their acceptance, the claim can be processed and the transfer can be made.

STEP 5: Providing post-directive proof of payment: We send the receiving entity all the details they require to complete the SARS ROT01 and SARS ROT02.

Common pitfalls (and how to avoid them):

1. Incomplete or inaccurate documentation: Final documents must be thoroughly checked to ensure accuracy, including correct fund names, signatures, and other pertinent details. Oversights in this area can lead to unnecessary back-and-forth communication, which delays the transfer process.
2. Not notifying the receiving entity: The new business application form must be submitted to both the current and receiving funds. The transfer request will be declined by the receiving entity if they don’t receive the new business application form from the client.
3. Misunderstanding the tax implications: It’s important to educate clients about potential tax implications associated with the benefit payment option selected. Particularly regarding the tax-free amount, understanding that this amount is cumulative across funds (rather than applicable on a fund-by-fund basis) is vital to avoid surprises at the time of payment.