12
WHEN COMPANIES FOLD OR MERGE, WHAT HAPPENS TO YOUR RETIREMENT SAVINGS? The money you have built up in a retirement fund is protected by law your company cannot touch your savings. If there is a restructuring or merger, you may be required to transfer to a new fund WHAT happens to your retirement savings if, as may have happened during the pandemic, your company gets into difficulties and either goes into liquidation or is bought out by another company? THE LAW PROTECTS EMPLOYEES Nashalin Portrag, head of the FundsAtWork Umbrella Funds, explains that when a merger or acquisition takes place, or a company restructures, there are implications for the group benefits that form part of your employment contract. “That is why there are clear legislative processes that must be followed with regard to employee benefits during a merger or acquisition. Section 197 of the Labour Relations Act facilitates the business transfer,
protects employees from being treated unfairly and protects their employment, which includes their employer-provided retirement and insurance benefits,” says Portrag. “The Act determines that the new employer employs transferred employees on terms and conditions that may not, on the whole, be less favourable than those they had with the old employer.” NEW EMPLOYER DECIDES ON FUND Portrag says new employers may allow employees to keep contributing to their existing pension or provident fund or decide that they have to belong to a new provident, pension or similar fund. Transferring employees to a new fund must comply with Section 14 of the
Pension Funds Act, which ensures that the transfer of pension benefits is reasonable and fair. It must also comply with the rules of the funds. Portrag cautions: “It is important to understand that you are not entitled to your withdrawal benefits in such a transfer. If the new employer chooses to participate in same fund as the existing employer, your retirement savings will stay invested in the portfolio you were in before the transfer. If the new employer chooses not to participate in the existing funds, you will be transferred according to Section 14 to the new approved fund chosen by the new employer.” LIQUIDATION If your employer liquidates the company, then you will have access to your retirement fund
