RAs still a red rag to readers

As an industry, we could do more to inform policyholders about their choices

I FEARED last week when I met a posse of cross folk from MMI that client care complaints officer Marius Kock would greet me with a flying head-butt. He felt I had maligned MMI’s retail insurance wing, Momentum.

Cool heads prevailed, but I wonder whether the many bitter readers who have written to this newspaper were mollified by MMI’s explanation of how they manage old-generation (pre-2009) retirement annuity contracts. (See story in Business Times June 1 or find it at bdlive.co.za).

“I really think you are on to something with the RA business,” wrote reader “peterD”. “It’s of great concern to a lot of people. I have been saving for RAs since long before 1996 and, as somebody wrote to Business Times [about Old Mutual], I’m not convinced I would not have been better off putting the money under a mattress.

“I’ve been shunted from Sage Life to f**k knows what to somebody else, eventually to MMI. The indignant MMI oke who suggested you consult your original contract is being disingenuous. Where the hell do I find my original contract?”

Further to last week’s story, let me clarify MMI’s mitigating argument. “Legacy assets” (such as peterD’s original Sage Life retirement annuity, and mine, sold by Protea Life) are administered in line with the mandate you gave the insurer at the time you signed the document.

If you can’t find the papers, ask a clientcare person (such as Kock) to send you a statement, which will show you your initial mandate, where your policy is now invested, its maturity date, what you have contributed in premiums, your life cover agreement (if any), your beneficiaries and the present value of the policy.

Query what would happen if you cashed in the policy. Many (but not all) contracts amortised broker and management fees over the full term. If you cancelled early (before it matured), costs might still legally be payable in the form of an exit penalty. Nothing anybody can do about it.

Kock was particularly keen to clear up confusion about MMI’s offshore structure. Registered in Luxembourg and run from London, Momentum Managed Funds SICAV-SIF-Momentum MF Global Aggressive is a $570-million (R6-billion) multi-asset investment scheme administered by JPMorgan. Kock stressed that the “MF Global” in the fund’s name has nothing to do with the company of that name that went bankrupt in 2011. “The ‘MF’ in the title of the portfolio is an abbreviation for ‘Managed Funds’.”

Contract holders can tweak the asset allocation of their portfolios at any time — as long as the risk-return metrics comply with your original legal mandate.

“As an industry, we could do more to inform policyholders about their choices,” conceded Philip du Preez, head of retail insurance at Momentum. “It is difficult to package these concepts without the role of a financial adviser.”

Consumer-protection bodies existed if you wished to take a complaint further, said Du Preez: the ombudsman, Financial Services Board and pension funds adjudicator.