Question:
I suffer from a non work illness namely Rheumatiod arthritis, Oestio arthritis and now have had my Fifth major back operation. my employer has started procedings to have me medically boarded but Old Mutual does not seem to want to consider the claim. They are the holders of the pension fund. If the employer was to offer me a voluntary retrenchment instead would it be considered as if I have resigned?
Answer:
Catherine, There are two issues here. The first is whether you qualify for your income disability benefit, if you have one attached to your employment. The insurer would have to assess you and determine whether you qualify. You would then receive 75% of your salary until you reach normal retirement age, at which point your retirement benefit would become payable. If you do not have this benefit, the alternate question is whether you qualify for early retirement due to ill-health, on the basis that you are unable to continue working. Here the fund trustees must be satisfied of this, after studying the necessary medical evidence. The problem (for you) is that the test is "absolute", so the question is not whether it would be difficult or painful for you to keep working, but whether it would be possible. If you accept voluntary retrenchment, then that is tantamount to resigning from the fund's perspective. You could then access your savings, but you would then be taxed per the withdrawal (rather than the retirement) lump sum tax table, which is less favourable.
