Fund blocked from paying death benefit to a third party

Naheem Essop

The executor of a deceased estate has failed in her attempt to get a pension fund to pay a death benefit into a third-party bank account.

Deputy Pension Funds Adjudicator Naheem Essop ordered the Old Mutual Superfund Pension Fund to pay the deceased’s death benefit into the estate bank account.

Following the member’s death on 24 September 2000, the death benefit was transferred to the fund. The fund resolved to pay the benefit to his surviving children in equal shares.

The complainant who is executrix of the deceased’s estate and represents his beneficiaries claimed the Old Mutual Superfund Unclaimed Benefits Preservation Pension Fund had failed to pay the death benefit of R599 440.36 to a third party as nominated by the deceased’s beneficiaries.

The complainant submitted that the fund insisted on paying the death benefit into the deceased’s estate account when in fact there were nominated beneficiaries. Further, the complainant said the fund refused to accept Letters of Authority and insisted that the complainant must change the same into Letters of Executorship. The complainant submitted that this amounted to fraud and refused to commit such criminal activity.

The complainant also submitted that the beneficiaries were now in Zimbabwe and their representative is their uncle who is based in South Africa. The complainant said that the beneficiaries appointed her office as executor and the fund insisted on running them out of pocket by demanding South African Bank accounts in their names. The complainant submitted that the beneficiaries did not want the funds to be transferred to their Zimbabwean accounts as the money will be worth nothing owing to the poor exchange rate.

The fund responded that it had resolved to pay the benefit to his surviving children in equal shares. The fund had to comply with section 37A(4) of the Act whereby it may only pay a beneficiary’s benefit into the trust account if the beneficiary provides sufficient proof that he/she is unable to open an account.

Furthermore, if any beneficiary is in South Africa illegally and, for this reason, is unable to open a South African bank account, the fund may not pay his/her benefit, as this would constitute aiding an illegal foreigner and would be contrary to the Immigration Act 13 of 2002.

The fund submitted that it was satisfied with the Adjudicator’s preliminary determination. The fund requested the Adjudicator to order the complainant to provide a certified Letter of Executorship in respect of the deceased’s estate.

In his determination, Essop said the duty to apply the provisions of section 37C rested with the fund which conducted an investigation but could not trace any beneficiary or an inventory relating to the estate.

In terms of section 37C(1)(c), the fund’s first duty, after failing to trace beneficiaries, was to pay the benefit to the estate. The benefit, therefore, accrued to the estate, and since there was no estate reported to the Master at that stage, it was then entitled to pay it either to the Guardian’s Fund or unclaimed benefit fund. The fund elected to do the latter.

Therefore, the fund discharged its duties in terms of section 37C, and the benefit was paid into the fund which is an unclaimed benefit fund.

Essop ordered the complainant to provide the fund with a certified Letter of Executorship and the details of the deceased’s estate late bank account. The fund was ordered to pay the deceased’s death benefit into his estate late bank account.