Old Mutual says ‘lessons learnt’ in social media furore over pension payout

18 Mar, 2024 - 00:03 0 Views
Old Mutual says ‘lessons learnt’ in social media furore over pension payout Old Mutual

eBusiness Weekly


By Liesl Peyper

Insurer Old Mutual claims it was always going to pay out the pension of a particular client whose daughter took to social media to complain about the company’s inaction.

Old Mutual public affairs manager, Celiwe Ross, said there is, however, legislation that all insurance companies need to adhere to before a claim can be settled.

These issues are currently causing a delay in the customer’s pension payout.

The JSE-listed insurance company has been the subject of a fierce social media furore about the purported low payouts of claims and not honouring its clients’ retirement and funeral benefits.

The social media storm erupted after a tweet by Sebabatso Molefi, who posted about her unhappiness about Old Mutual’s non-payment of her mother’s pension.

The post read: “Dear @OldMutualSA please advise why you are refusing to release my mother’s money even though a court order has been provided. You are in contempt of court and I am about to lose my cool right now.”

— Seba (@Seba_S_M) March 5, 2024

Her post has been viewed and retweeted over a million times and led other disgruntled Old Mutual policyholders to share their experiences of low payouts and struggles accessing benefits related to funeral and insurance policies.

Two options

Old Mutual has since met with Molefi and the family’s legal representative, and two possible settlement options are currently on the table.

Ross said Old Mutual has committed to pay out the claim.

“We have committed to pay out this claim. We presented them with two options of what the outcome could look like and each have pros and cons which they need to consider. They are taking advice on what the best option is for Mrs Molefi.”

Ross said media reports that Old Mutual agreed to pay out an amount of R3 million to the complainant are inaccurate.

“We have never disclosed any amounts. We have been very conscious about protecting the privacy of this matter. We have been vague about the specifics because of the sensitive nature we are dealing with. What I am able to say is the claim involves a retirement fund, which is governed by the Pension Funds Act and Income Tax Act.

“The Pension Funds Act tells us how to execute against a retiral, what do we do with the funds, and how much a member is entitled to. The Income Tax Act talks about tax provisions, so there are processes that are outside of Old Mutual’s control – any insurer for that matter – that we have to adhere to, as we are a highly regulated industry.”

Over and above that, there are certain legal processes between the parties involved, said Ross, which are governed by a different set of laws. “If it were just a pension fund where the member retires the enactment would have been very simple.”

Insurer unprepared for backlash

Ross admitted that Old Mutual should have handled the outcry on social media differently. Asked whether Old Mutual underestimated the backlash that followed, she acknowledged lessons were learnt.

“How do you plan for it? We were not perfect in this. A child of a customer had to turn to social media to raise her frustration. It is well acknowledged and we are looking at our value chain from a customer services perspective.”

Besides the outcry from unhappy customers, there have also been calls from social media users to summarily cancel Old Mutual insurance products and boycott the insurer. Some financial advisors have also taken to X (formerly Twitter) to advertise their services to “move” customers’ policies to other insurers.

Asked whether Old Mutual has seen an exodus of customers following the bad publicity, Ross said the company is monitoring the trend.

“We’ll see what is happening from a customer exit perspective. But there isn’t anything that has caused us alarm.”

Old Mutual is, however, concerned about the outcry. “It feeds into the narrative that the broader insurance industry is not honouring their obligations,” said Ross.

“We are continuously refining and tweaking the way in which [we] communicate to customers. But we need to do more, and also talk internally about the conversations we want to have with our customers.”

Old Mutual’s share price closed at R12.07 yesterday – 1.15 percent lower than Tuesday and down more than 6 percent so far this year.

Insurer provides more clarity

Old Mutual said on Thursday that the reason it did not comply with a court order to pay out the pension benefits was because it involved a divorce decree on pension assets that were received after the customer’s retirement had been processed.

The company said it had been reluctant to talk about the matters involving Molefi’s mother’s pension, but based on the public interest in this matter and the damage to its reputation, there was no alternative but to provide context.

Old Mutual said the customer’s divorce had not been disclosed at the time of processing his retirement. The pension fund is held in the name of “Mr Molefi” – the ex-husband of Sebabatso Molefi’s mother.

Old Mutual said at retirement, a portion was taken in cash, with the remainder paid into an annuity as legally required by the Pension Funds Act. Before a member retires, a divorce order can entitle a non-member spouse to a portion of pension assets in a lump sum, though these are taxable if withdrawn in cash. The allowed format is a portion of the member’s annuity income post-retirement.

“It was always Old Mutual’s intention and commitment to facilitate a settlement between the individuals involved. However, we needed to ensure that in facilitating the pay-out we complied with the pension funds law and tax law,” Ross reiterated.

Asked why Old Mutual did not divulge this information in the first place, Ross said the information was protected under the Protection of Personal Information Act. Now that the information is in the public domain, Old Mutual is at liberty to share details.

“Biggest risk is not being in China,” says German Chamber of Commerce executive in Shanghai

SHANGHAI, March 15 (Xinhua) — China remains appealing to German businessmen, and many believe that “the biggest risk is not being in China and therefore losing global competitiveness,” Maximilian Butek, executive director and board member of German Chamber of Commerce in China-Shanghai, told Xinhua in a recent interview.

German companies hope to “benefit from the innovation system” in China not only to have growth opportunities, but also to keep being competitive, said Butek, also chief representative of the Delegation of German Industry and Commerce in Shanghai.

German businessmen “are like in a ‘time bubble’ and see that the last three years China developed further,” Butek said. “There are a lot of innovative new products. Digitalization was driven further. Artificial intelligence is developing so fast.”

“Major new technologies will be developed in China, and if we are not here to participate in these developments, how can we survive abroad? Luckily, I’m not so worried because most of the German companies understood that,” said Butek.

The German Chamber of Commerce in China released a business confidence survey for 2023/24 in January, with responses from 566 member companies.

Over 90 percent of the companies, shows the survey, plan to continue establishing themselves in the Chinese market; more than half of them plan to increase their investments in China over the next two years; and 78 percent are expecting consistent growth in their industry in the coming five years.

Butek believes that the Chinese economy, which has become quite mature, can be very robust in the middle and long term. He commended the ever-improving business environment in China, saying that many Germans feel that it’s “easy to talk about cooperation, about partnership in China.”

“I believe that Chinese companies learned quite well the last 30 years from German companies. It’s time now for us to learn from Chinese companies. I think we are really on a level where cooperation could be both ways now,” he said.

He noted that China provides great chances for future advancement in areas like electric car batteries and autonomous driving. “That’s why also startups are coming to China.”

Butek voiced confidence that the visa-free policy for some European countries, including Germany, will encourage more Germans to travel to China, hence more business and cultural exchanges.


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