Acting Pension Funds Adjudicator Dr Elmarie de la Rey
The Acting Pension Funds Adjudicator Dr Elmarie de la Rey has ordered a mining company to cough up and pay an outstanding death benefit due to the parents of a deceased employee. The company’s failure to notify the pension fund of the member’s death caused delays in payment of the benefit.
Following the death of their son, Mr M M Sekiti in June 2004 while in the employ of Anglo Platinum Mine (Pty) Ltd , Mr and Mrs Mampye Johannes Sekiti of Moroke received payment of pension and provident amounts from the fund, but not the death benefit.
In ruling Dr De la Rey said: “The employer in a pension fund at the very least owes a duty of good faith to its employees. It is essential for the employer to complete a notification form indicating the cause of the termination of employment for the fund to determine which benefit is payable.”
By virtue of his employment, the deceased was a member of Amplats Retirement Fund (Provident and Pension Section) at time of death. His parents were listed as his beneficiaries.
The fund was administered by Old Mutual Life Assurance Company (SA) Limited (second respondent), with consultancy services provided by Alexander Forbes Financial Services (third respondent).
The complainants alleged they made several attempts to receive the death benefit payment but with no positive outcome. They sought assistance from the PFA three and a half years later in December 2007.
In its response the second respondent, fund administrator Old Mutual Life Assurance Company, confirmed the benefit payable in respect of the deceased was finalised on 13 October 2010 as being the full and final settlement of all benefits.
The amounts payable were calculated as the provident fund amount, less provident fund tax and any advances paid, which amounted to R13 189.71, and the pension fund amount less pension fund tax, which amounted to R8 389.51.
Both the pension and provident fund amounts were distributed equally to the deceased’s parents via bank deposits.
In its response the third respondent, fund consultant Alexander Forbes Financial Services, submitted that it received the original complaint in February 2008 and carried out detailed investigations to establish which fund the deceased belonged to and if a benefit was due.
The investigations showed the deceased did not complete a nomination form. They confirmed the complainants as the likely beneficiaries, because the deceased was never married, had no children and was survived by his brother.
It said a copy of the deceased’s salary advice showed his employer as Bafokeng Rasimone Platinum Mine, which was not a participating employer in the fund. It said the deceased was transferred from Bafokeng Rasimone Platinum Mine to Lebowa Platinum Mine, which was a participating employer in the fund at the time.
The third respondent said a copy of the ID, payslip, death certificate and proof of fund membership had been forwarded to the insurer Capital Alliance Group Risk in May 2006.
But the death notification form was still outstanding from the employer and was only received by the fund on 3 July 2009.
The fund consultant submitted that the calculations in 2006 showed a benefit of R7, 564.91 in the pension section and a benefit of R9, 754.28 (excluding the group life benefit) in the provident section of the Fund.
In June 2009 the trustees decided to make cash payments of 50% each to the deceased’s parents for pension benefits of R 9, 379.08 and the provident fund benefit of R12, 093.48.
The group life benefit of 4 X Annual Salary or R 108, 686.00 was repudiated by the insurer on contractual grounds. A second request to the insurer to consider payment of the claim on an ex-gratia basis had not been approved or declined.
No response was received from the fourth respondent, the employer Anglo Platinum Mine.
In ruling Dr De la Rey said: “The payment of any benefit that is due to a member of a fund is regulated by the fund’s rules which state ‘the benefit payable ... shall be insured with a Registered Insurer and no such benefit shall be paid unless the claim for the benefit has been admitted by the Registered Insurer’.
“Due to late notification, the insured benefit claim was repudiated on contractual grounds. The late notification of the member’s death to the insurer was the result of fault on the part of the employer. In the circumstances, the complainants should be put in as good a position as if the wrong had not been committed.”
Dr De la Rey ordered the fund to calculate the amount of the death benefit that would have been payable to the complainants had it been properly notified about the deceased’s death timeously. Interest would be levied at the rate of 15.5% per annum for six years from 25 June 2005 to the 25 March 2011 date of determination.
The employer was directed to pay the complainants the amount due within seven days of receipt of the fund’s calculations.
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