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PENSIONS: Two Funds Ordered to Pay Death Benefits Immediately

 





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Following separate but similar complaints to the acting Pension Funds Adjudicator about the delays in finalising death benefits, two provident funds have been accused of “gross dereliction of duties” and ordered to pay the death benefit with 14 days.

In the first case, Ms KK Kgasoane of Kwa-Thema complained to Dr Elmarie de la Rey on 11 June 2008 that the Food and Allied Workers Union Provident Fund (the respondent) had not paid out the benefit following the death of her partner AL Mafolo who had been employed by Dewfresh (Pty) Ltd until his death on 18 September 2005.

Ms Kgasoane said a child, Ofentse Mmakwale Kgasoane, was born on 17 April 2004, out of
her relationship with Mr Mafolo.

She submitted she had submitted all the documents which had been requested by the
respondent in order to finalise the distribution of the death benefit. However, an
inordinately long period had passed with the respondent failing to finalise the distribution
of the deceased’s death benefit.

In response to the Office of the Pension’s Funds Adjudicator, the respondent confirmed the membership of the deceased and submitted that a resolution of the trustees to distribute the benefit as stipulated in section 37C of the Act was still awaited.

On 17 August 2010, the respondent confirmed that the deceased’s death benefit had not been distributed to his beneficiaries as the trustees’ resolution was outstanding.

In her determination, Dr De la Rey said that in terms of section 37C of the Act, the board of the trustees has 12 months within which to trace the deceased’s dependants and effect payment of the benefit.

“It has been held that the duty to pay is not dependent on the expiry of the 12 month period, but is dependent on whether or not the board is satisfied that it has investigated and considered the matter with due diligence and is in a position to make an equitable allocation.

“In the case of Ms Kgasoane, a period of five years has elapsed without the respondent having finalised the distribution of the deceased’s death benefit.

“No convincing reasons have been advanced by the respondent to explain the inordinate delay in the distribution of the deceased’s death benefit other than that the trustees’ resolution is still outstanding. This explanation is unacceptable.”

Dr De la Rey said a copy of the determination would be forwarded to the Registrar of Pension Funds as well as the Head: Surveillance and Enforcement, Registrar of Pension Funds, for possible action against the trustees of the respondent for what would appear to be a gross dereliction of duties by the trustees.

She ordered the respondent to pay the death benefit, together with interest thereon at 15.5% per annum computed from 18 September 2005 to date of payment, to the dependents of Mr Mafolo within 14 days of 6 June 2011.
In the second case, Mrs MS Mokgoto of Mafikeng complained to the Office of the Pension Funds Adjudicator that Bosele National Provident Fund (respondent) had delayed in paying out the death benefit to the dependents of Mr RM Mogale who passed away on 30 January 2004.

In response, the respondent said the payment was “in progress.” However, as a result of
migrating its data to the “Metropolitan computer system” it suspended contributions and
payment of benefit claims until 22 May 2009.

The respondent submitted another response on 19 June 2009. It submitted that it could not
migrate the data by 22 May 2009 due to “technical reasons.” It was aware that this adversely
affected its service delivery to the entire membership.

As such, the matter has been escalated to the “highest authorities” within the fund
administration. On enquiry in May 2011 the respondent had still not paid the death benefit.

In her determination, Dr De la Rey said by delaying payment of the death benefit to Mr
Mogale’s dependents, the fund had failed to discharge its duties in terms of the rules and the
Act.

“The respondent’s negligence cannot be condoned by this tribunal. The respondent’s failure
to migrate its data over a lengthy period of time cannot be a justifiable excuse for the
delaying in paying the death benefit.

“The respondent is unjustifiably delaying paying the death benefit to the dependants and
should be held liable to pay such benefit, including interest, without any further delay.

“A period of seven years has elapsed without the respondent having finalised the
distribution of the deceased’s death benefit.

“No convincing reasons have been advanced by the respondent to explain the inordinate
delay in the distribution of the deceased’s death benefit other than that the trustees’
resolution is still outstanding. This is unacceptable, said Dr De la Rey.

The respondent was is ordered to pay the death benefit, together with interest thereon at
15.5% per annum computed from 30 January 2004 to date of payment, to the dependants of
Mr Mogale within 14 days of 6 June 2011.

In this case too, a copy of this determination was to be forwarded to the Registrar of Pension
Funds as well as the Head: Surveillance and Enforcement, Registrar of Pension Funds, for
possible action against the trustees of the respondent for what would appear to be a gross
dereliction of duties by the trustees.

 
 
 
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