PFA dismisses woman’s claim to R21m death benefit

10 April 2024 The Office of the Pension Funds Adjudicator (OPFA)
Muvhango Lukhaimane

Muvhango Lukhaimane

A woman who spent 17 years as a businessman’s life partner has failed in her bid to lay claim to a share in the death benefit totalling R21,3 million.

The woman complained to the Pension Funds Adjudicator that Old Mutual Superfund Provident Fund should not have paid the full death benefit only to the deceased’s two biological daughters.

The complainant was aggrieved she had been excluded as a beneficiary of the death benefit, notwithstanding the fact that she had received R7 000 000 from a life policy due to the deceased’s death; was bequeathed immovable property estimated at R1 700 000; and received R35 000 each month in terms of the deceased’s Will.

The deceased was a member of the fund until he passed away on 24 July 2021. The deceased was survived by the life partner (complainant); the complainant’s major son; the deceased’s two biological daughters; four grandchildren; and his former spouse.

Upon the deceased’s death, a total death benefit of R21 308 051. 38 became available for allocation to his beneficiaries. The board allocated 50% of the death benefit to each of the deceased’s two daughters.

The complainant submitted that she had been in a romantic relationship with the deceased since 2007. She had resigned from her employment at a bank to attend to the needs of the deceased and her then minor child at home. She said the deceased financially assisted her by giving her an allowance equal to the salary she had received for the duration of their relationship. She said the deceased was financially responsible for supporting her and her child from a former spouse throughout their 17-year relationship.

The complainant also averred that she had property that she obtained from her former spouse through a divorce. The deceased assisted her in paying off her mortgage bond by providing her with R700 000. She sold her property for R967 592.72 to reside with the deceased, who in turn, would provide for her.

She submitted that shortly after selling her property, she and the deceased entered into a cohabitation agreement. She submitted that at the time, she had just sold her residential property and felt compelled to agree with the terms of the agreement in fear that she would be left without a home for herself and her son.

She submitted that since signing the agreement and residing with the deceased, there had been instances of financial manipulation against her by the deceased as he would request large sums of money, which she would pay him. She submitted that her only source of income during her relationship with the deceased was the maintenance payments made by her former spouse, credit overdraft facilities, and the sporadic but sufficient payments in cash/deposits from the deceased.

The complainant submitted that the fund allocated the death benefit to the deceased’s two biological daughters who were fully independent and employed businesswomen who were not financially dependent on the deceased. She said the two daughters had also inherited significant business interests from the deceased.

The complainant claimed that when she signed a cohabitation agreement with the deceased in February 2014, there were no witnesses and some of the terms of the agreement were not explained to her. Although clause 5 of the agreement waived her right to share in the pension, provident fund, investments, profit sharing or other retirement interests of the partner; and the agreement terminated upon the death of either party; the complainant submitted that she is no longer bound by the cohabitation agreement after the deceased’s passing, and as a result, she is entitled to any benefit that may arise from the deceased’s death.

The complainant submitted that she was informed by the executor of the deceased’s estate that his estate was insolvent and incapable of providing the necessary finance anticipated for the establishment of a trust that she was the beneficiary of.

She submitted that the executor advised her that due to the estate's financial position, she may have to forfeit her special bequests, such as a car and the house, in order to give effect to the remainder of the Will. She submitted that the dispute between herself and the executor was on-going and it was not certain whether the Will’s provisions would be implemented as intended. She submitted that she could not rely on the R35 000 per month as envisioned in the Will as a safety net.

The complainant submitted that she received a life insurance policy payout (R7 million) following the deceased’s passing. She indicated that though it is a substantial amount, it does not cover all living expenses and potential unforeseen costs.

She submitted that her former spouse had been financially responsible for her son since the deceased passed away. She submitted that her son was in the final year of his studies and moved out, leaving her without a maintenance contribution from her former spouse. She submitted that she has not worked for 15 years and struggled to obtain employment at her age. She submitted that her policy payment may not last throughout her lifetime.

The complainant further submitted that the fund had failed to recognise her as a dependant. She stressed that she was financially dependent on the deceased and, therefore, should be considered as a factual dependant. The complainant provided a non-registered marriage certificate between her and the deceased dated 24 June 2019 as proof that they wanted their relationship to be seen as legitimate as a normal marriage.

The complainant submitted that the waiver clause in the cohabitation agreement was intended for the possibility of a divorce between her and the deceased. She said the agreement did not exclude a discretionary award of a portion of the pension benefit.

The complainant said she and the deceased lived in separate homes for four to five years before he passed away. She submitted that the deceased regularly travelled between the two homes and was in charge of the general home tasks associated with both houses. She submitted that at all times, she lived and acted as the deceased’s wife.

The complainant submitted that the executor of the deceased’s estate paid her an estimated amount of R35 000 per month as she was aware of the extent of her dependency on the deceased. She submitted that she is uncertain whether the payments came directly from the deceased’s daughter or if it came from the deceased’s estate.

The complainant claimed that she suffers from a clinically diagnosed auto-immune disease, Lupus, which influences her daily functioning. She had applied for various jobs of different skill levels, with no success. She submitted that she is close to retirement age which limits her ability to earn income, which indicates that she may not be able to earn an income in the future.

In its response, the fund submitted that in terms of the deceased’s Will, the deceased made provisions for the complainant to receive a monthly amount of R35 000. Thus, it can be argued that the complainant no longer needs financial support. The fund submitted that the complainant was also bequeathed immovable property estimated at R1 700 000.

The fund submitted that according to the cohabitation agreement is a clear indication that the deceased did not wish for the complainant to have any share in the proceeds of his death benefit.

The fund also submitted that it was confirmed that the complainant and the deceased lived apart for a few years before his death. It investigated the complainant’s dependency on the deceased and found that she was receiving R35 000 from the estate until she received R7 000 000 from various policies payable to her as a result of the deceased’s death. It stated that the complainant also confirmed that she receives R12 000 month from her eldest son and R10 000 per month in child support from her younger son’s biological father.

The fund submitted that even though the complainant is 52 years old, she has prior work experience and a tertiary-level education. It submitted that although she has not worked for a long time, she still has an income-earning potential.

The fund declared that the complainant received sufficient capital payments from third-party payments and with the consideration of the cohabitation agreement together with the content of the deceased’s Will, it concluded that the complainant had received enough financial support.

The fund submitted that even if the complainant suffers from Lupus, she is not completely precluded from finding employment that suits her conditions. It submitted that it deemed it equitable and reasonable to allocate the death benefit to the deceased’s two children. The fund concluded that it took all the relevant factors into account when allocating the death benefit and made an equitable and reasonable allocation.

In her determination, the Pension Funds Adjudicator Muvhango Lukhaimane said it is the board’s responsibility when dealing with the payment of death benefits to conduct a thorough investigation to determine the beneficiaries, to thereafter decide on an equitable distribution and finally to decide on the most appropriate mode of payment of the benefit payable.

She said the fund was correct in identifying the deceased’s biological daughters as dependants of the deceased.

She said permanent life partners are included in the definition of dependant. Therefore, the complainant qualifies as a legal dependant of the deceased. However, the fact that a person qualifies as a legal or factual dependant does not automatically give them the right to receive a portion of a death benefit.

“The submissions indicate that the complainant received R7 000 000 from a life policy due to the deceased’s death and R35 000 per month from either the deceased’s estate or its executor.

“It is further unconfirmed whether or not the deceased’s estate is insolvent. “However, if the estate is not insolvent, the complainant was also bequeathed immovable property estimated at R1 700 000.

“The complainant was placed in a better position due to the third-party payment she received. Furthermore, the complainant can still find employment. The facts indicate that even though she is 52 years old, she has prior work experience and a tertiary-level education. She still has an income-earning potential and can find employment. Therefore, the fund was correct in not allocating a portion of the death benefit to the complainant,” said Ms Lukhaimane.

With regard to the cohabitation agreement, Ms Lukhaimane said the complainant should have been aware of what she was signing and cannot claim that the terms of the agreement were not explained to her. The terms of the cohabitation agreement clearly show that the parties agreed that there would be no sharing of pension benefits.

“In light of the above, I am satisfied that the board of the fund took into account relevant factors and did not abuse its discretion in the allocation of the deceased’s death benefit.

“The death benefit was properly allocated to the dependants of the deceased and there is no reason to set aside the board’s decision. Thus, the complaint cannot succeed and is, therefore, dismissed,” said Ms Lukhaimane.

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