PFA awards death benefit to member’s extramarital child

15 April 2011 Pension Funds Adjudicator
Pension Funds Adjudicator Dr Elmarie de la Rey

Pension Funds Adjudicator Dr Elmarie de la Rey

A mineworker’s widow who is the mother of their three children has failed in her attempt to block a death benefit being paid to his extramarital child.

The acting Pension Funds Adjudicator Dr Elmarie de la Rey has accepted an affidavit stating the deceased was the father of the child born out of wedlock and supported the contention that the child had been correctly considered in the death benefit distribution.

Sunnyboy John Tlou was a member of the Amplats Mines Retirement Fund (first respondent) by virtue of his employment with Anglo Platinum’s Rustenburg Platinum Mines Ltd - Amandelbult Section. When he died on 1 October 2006 a death benefit became payable in terms of the first respondent’s rules.

At the time of his death, he had been married to Edith Tlou (complainant) and they had three children - Thapelo and Keagile who at the time of the complaint in May 2007 were unemployed and Kelebogile who was in grade 10.

A nomination form had been completed and signed by the deceased on 18 October 2005 and in the form, the complainant was named as the deceased’s spouse.

The complainant submitted that the death benefit due to her and the deceased’s children was being delayed due to certain allegations which were being made by her mother-in-law.

The complainant submitted that the deceased nominated her and their children as nominees but was surprised as to why the death benefit was not being paid out as she was now the sole breadwinner in her household. She was employed as a nurse and earned R6500 a month.

In response, the first respondent indicated that at its trustees meeting on 10 May 2007, a preliminary decision on the dissolution of the deceased’s death benefit had been made based on the information they had at their disposal.

The deceased’s death benefit was R432274. The trustees proposed the distribution of the death benefit as follows: Edith Tlou - 60% in cash, Thapelo - 10% in cash, Keagile - 10% in cash and Kelebogile - 20% held in trust.

The first respondent also indicated that it had come to the trustees’ attention that the deceased’s mother had contacted the Old Mutual Life Assurance Company (South Africa) Ltd (second respondent) and informed them that the deceased had a son born out of wedlock.

An affidavit had been requested but none had been forthcoming immediately. A decision was taken by the trustees on 12 July 2007 that the administrator withholds payment of the benefit pending an affidavit from the deceased’s mother regarding the extra-marital child.

The first respondent also submitted that it had received information from Amplats Group Provident Fund, the fund to which the deceased belonged before joining the first respondent, indicating that the deceased had a 14-year old son (name withheld) who was born out of wedlock.

The child’s grandmother also sent an affidavit to the trustees confirming that her daughter was the child’s mother and that his father was the deceased. The child’s mother had since passed away and the child was staying with the grandmother.

Based on this information, on 7 August 2007 the trustees amended the resolution taken on 10 May 2007 to include the additional child as follows: Edith Tlou - 50% in cash, Thapelo - 10% in cash, Keagile - 10% in cash, Kelebogile - 15% held in trust and extramarital child – 15 % held in trust.

The first respondent submitted that during November and December 2007, while it was in the process of making payment to the dependants, the complainant had raised a further issue with regards to the trustees resolution taken on 7 August 2007 and contested the 15% allocated to the extra-marital child.

The first respondent took a decision to proceed with the payment to the remaining beneficiaries and withhold the payment to the extra-marital child until such time as it received the results of a DNA test.

The first respondent explained that upon receipt of the DNA results, it would apply its mind to the distribution of the remaining 15% of the death benefit.

However, if the DNA results were not forthcoming and a reasonable period of time had lapsed during which the complainant was unable to prove her claim, the trustees would allocate the death benefit as per their resolution.

The first respondent indicated that it attempted to contact the complainant on several occasions without success in respect of the DNA test, and that by 28 May 2008, the complainant had still not sent any information relating to the child.

Since the trustees had taken a decision to give the complainant some time in which to obtain the DNA test results but she had failed to do so, and in consideration of the affidavit supplied by the extra-marital child’s mother, the trustees took the decision that the benefit be allocated as per the resolution made on 7 August 2007.

Dr De la Rey said the issue for determination was whether or not the trustees exercised their discretion properly in the allocation and distribution of the deceased’s death benefit. The payment of death benefit is regulated by section 37C of the Pensions Act, read in conjunction with the definition of a “dependant” in section 1.

The primary purpose of this section is to protect those who were financially dependent on the deceased during his lifetime.

“Dependant” is defined in section 1 of the Act, among others, as “a child of the member”.  

In her determination, Dr De la Rey said trustees are given a wide discretion to determine which dependant will share in the benefit and they must exercise their discretion properly by considering relevant factors and ignoring irrelevant ones.

She said the trustees should have regard to a number of factors including but not limited to the age of the dependants; the relationship with the deceased; the extent of dependency; the wishes of the deceased placed either in the nomination and/or his last will; and financial affairs of the dependants including their future earning capacity potential.

The complainant and the three children she had with the deceased all qualified as dependants of the deceased for purposes of the death benefit distribution because they fell within the definition of a dependant in terms of section 1(a) of the Act.

The extra-marital child was also a dependant of the deceased and, therefore, must be considered in the death benefit distribution as the Act and the Constitution did not discriminate between “legitimate” and “extra-marital” children.

“The complainant was provided with an opportunity to contest the 15% allocation to the extra-marital child and to provide the results of his paternity test yet she failed to do so within the requisite time period.

“The complainant also failed to submit further evidence challenging the distribution of the death benefit.

“The affidavit submitted by the said child’s grandmother further supports the contention that he was indeed the deceased’s child. He was a minor child who was correctly considered in the death benefit distribution,” Dr De la Rey said.

She added the complainant’s contention that the trustees of the first respondent misdirected themselves in not carrying out the deceased’s wishes as expressed in his beneficiary nomination form could also not be sustained.

“Although the deceased may have expressed an intention to benefit a nominated beneficiary, it does not necessarily follow that a benefit will in fact be awarded to the nominee because the deceased’s intentions as contained in the nomination form are only one of the factors taken into consideration when allocating a death benefit.

“It is the trustees’ responsibility when dealing with payment of death benefits to conduct a thorough investigation to determine the potential beneficiaries, to thereafter decide on an equitable distribution and finally to decide on the most appropriate mode of payment of the benefit allocated.

“I am satisfied that the trustees have exercised their discretion properly and taken into account all the relevant factors, ignored irrelevant ones and did not fetter their discretion when allocating and distributing the death benefit. In the result, there are no reasonable grounds to interfere with the trustees’ decision.

“The complaint cannot succeed and is hereby dismissed,” Dr De la Rey ruled.

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