The benefits payable to a member are defined by the rules of the scheme. These rules are captured by the administrator and comprise the following:
- The normal and early retirement ages of the membership groups of the scheme
- The products available to the scheme (e.g. withdrawal benefit)
- The scales applied to the products (e.g. vesting scales)
- The benefit events available to the scheme (e.g. resignation)
- The purchase or payment from the fund of an annuity
- The benefits applicable to the membership groups of the scheme (i.e. what they are eligible for)
Once these rules have been captured and authorised by the administrator, benefit payments can be processed.
The benefit payment process is performed by two specific roles, viz. the client role (capture) and the administrator role (process).
Access to the benefit payment process is controlled by data level security and scheme security.
To be able to process benefits on the web front end, the user must be a valid contact person for either the participating employer or the pay centre of the scheme.
To be able to process benefits on IN.pensions, the user must have
- access to the scheme
- the appropriate functional security to process the benefit
- the correct authorisation level to process the benefit
Submission of claim detail (by Payroll Clerk)
The client initiates the benefit payment process on the web site by capturing basic information regarding the member, e.g. date of exit. Validation is done to ensure that duplicate claims are not created.
Capture of exit notifications (by an agent of the Trustees)
The agent of the trustees needs to capture the balance of the information needed to process the exit. At this stage the administrator knows about the exit case, but will not take any action until the agent has authorised the claim. The administrators will also have limited access to change any exit information.
The agent captures the following information on the benefit web site:
- Specific reason for the claim (e.g. Cause of Death in the case of a death claim) including additional information needed depending on the exit reason.
- Beneficiaries (in the case of a death claim). The trustees' decision in this regard is recorded.
- Prior claims on the benefit amount, such as divorce settlement amounts, surety claims or court orders.
- Benefit payment allocation (including any preservation information) and annuity details.
- Payee bank details (these are restricted to South African banking accounts).
- Pension details (whether the pension will be purchased or paid from the fund).
- The South African tax detail (including Offshore Service).
- Benefit options, where applicable (must be done prior to doing the benefit payment allocation).
The agent of the trustees authorises that the Benefit Claim is valid, the information captured is correct and that there are the necessary supporting documents for the claim. The claim input data will be locked from further updates (both at the Client and administrator site). From this point onwards, no additional input is required from the trustees and the administrator will take over the processing of the benefit claim.
The authorisation process on the web site triggers an e-mail to the administrator notifying them of the benefit to be processed.
Once the benefit has been authorised on the web site, it will appear on the IN.pensions application for further processing. All the details captured by the client are available to the administrator.
Obtaining data from external sources
The first step in the administrator's part of the claim process is to obtain data required for the claim, if necessary, from any external sources. The following are the tasks that could be required, and if applicable, are initiated concurrently.
Realisation of investment monies
Units are disinvested from the applicable Investment Houses based on the number of units in the member's accounts. The member's benefit will be based on the unit prices as at the date of disinvestment.
Banks
Surety settlement amounts are obtained from the banks. The administrator of the surety is contacted for the settlement amounts and these are manually entered into the system.
Notify Underwriters
The administrator sends a claim notification to the underwriter of the risk benefits. If the arrangement is that the administrator attends to the payment of risk benefits, then the administrator will request the benefit amount and make payment of the benefit to the retirement fund. There will be no further communication with the underwriter.
Calculate Gross Benefit
The member's gross benefit is determined after all the disinvestments in respect of the claim have taken place and the risk benefit has been captured.
Tax payable
The tax process is started once all the processes in the previous steps have completed successfully.
IN.pensions will request a tax directive. For all cases where tax directives have to be applied for, a daily file is created for input into the automated SARS system. The tax directive from SARS will be returned via the automated SARS system and this information will be loaded into IN.pensions. The benefits to be disbursed (net of offsets) will be determined after the tax amounts have been supplied.
Payment Authorisation
The following process steps complete the payment authorisation process:
- Identify claims that are ready for payment authorisation. A claim will be ready for authorisation if outstanding contributions were received, risk monies were transferred, tax directives were processed, the net benefits were calculated and the administrator is in possession of all the mandatory documents.
- Diarise payments to workflow for authorisation. If a waiting period applies for payment of the whole or portion of the benefit payment, then these payments are authorised when the waiting period expires.
- Determine whether late payment interest is payable. Interest (using variable monthly interest rates) is based on the term between the date the disinvestment money was deposited in the operational account and the date of payment of benefits. Late payment interest is added to the benefits.
A claim can be cancelled at any stage of the process, (including after a payment has been authorised).
The claim may be modified or the processing of the claim may be halted.
The specific reason for cancellation must be provided from one of the following:
- Changes to Client input data
- Incorrect benefit event
- Incorrect member being processed
- Transfer of the member’s money to another fund instead of the authorised cash payment
- Incorrect expected date of payment
- Incorrect date of exit
- Reprocess claim due to incorrect data
- Rejected by authorisor and claim requires fixing and reprocessing
- Member no longer exiting the scheme
- Surety information is incorrect
- Wrong tax directive information recorded
- Wrong surety information recorded
In order to cancel a claim that is still being processed prior to authorisation, the Cancel Claim menu option must be used. Refer to
Processes
Benefits
Capturing of Exit Notifications
Cancel a Claim
Claim Cancellation
In order to cancel a claim that has already been authorised, the Reinstate Membership menu option must be used. This function is available to the administrator only.
A benefit payment can be cancelled after any of the payments have been authorised. However, in the case of a cash payment that has been authorised, the cheque should not have been cashed yet.
When a member is reinstated, the membership status may be returned to one of Exit in Process, Live or PHI (Permanent Health Insurance).
If the membership status is changed to Exit in Process, then the membership benefit claim status is changed from Finalised to that of Client Authorised. The already captured and authorized data on the web remains in force. The benefit payment process must be started again.
If the membership status is changed to Live or to PHI, then the claim is completely cancelled and reversed. The exit process must be started from the beginning in order to process a claim for the member.