FANews
FANews
RELATED CATEGORIES

PFA : Fund will not pay benefit to a spouse it is not aware of

17 February 2015 Muvhango Lukhaimane, Pension Funds Adjudicator
Muvhango Lukhaimane, Pension Funds Adjudicator.

Muvhango Lukhaimane, Pension Funds Adjudicator.

A spouse is not obliged to be paid a benefit as a “qualifying spouse” if the pension fund had not been notified of the existence of the spouse.

This is the basis on which Pension Funds Adjudicator Muvhango Lukhaimane dismissed a complaint by a woman who was aggrieved that she had not been paid a benefit upon the death of her husband although his former wife from whom he was divorced received payment.

The deceased had failed to inform the pension fund of the existence of his second wife as is required by the rules of the fund.

Mr B was employed at Sasol Group Services (Pty) Ltd from 27 May 1991 until 31 May 2007 and was a member of the Sasol Pension Fund (first respondent). He became a pensioner owing to medical disability on 1 June 2007. He passed away on 19 August 2014.

Mr Bhad divorced from his former spouse, Y, in December 2007. Their minor daughter, Z, was born on 31 August 2004.

The complainant and the deceased were married on 28 March 2009. However, the death benefit was paid to the deceased’s divorced spouse and minor child.

The complainant submitted that the former spouse had agreed not to receive any pension and policy benefits of the deceased in terms of the divorce settlement agreement.

The complainant also submitted that the first respondent had claimed that she was not married to the deceased. She attached a copy of her marriage certificate in support of her complaint and said they never divorced and there was no legal separation.

In its response the first respondent submitted that the board decided to allocate the death benefit to the deceased’s former spouse and minor child in terms of its rules. They were the qualifying spouse and child in terms of the rules of the first respondent.

A “qualifying spouse” in terms of the rules of the first respondent is any person who, at the date of the member’s death or the pensioner’s retirement was a legal spouse of the member or pensioner.A “qualifying child” in terms of the rules of the first respondent is a child who was financially dependent on the member immediately before his death.

The deceased and his former spouse were still married when he went on retirement. The former spouse is, therefore, the qualifying spouse in terms of the rules of the first respondent and Z is the qualifying child.

In her determination, Ms Lukhaimane said Section 37C of the Pension Funds Act governs the disposition of death benefits. It places a duty on the board of management to identify the beneficiaries of a deceased member and also vests the board with discretionary powers on the proportions and manner of distributing the proceeds of a death benefit.

Ms Lukhaimane said the rules of the first respondent made it clear that a qualifying spouse “is a person, who at the member’s death or retirement is his legal spouse or partner and provided that the member or pensioner has notified the fund of the existence of such qualifying spouse”.

“However, the deceased failed to inform the first respondent of his marriage to the complainant as required in terms of the definition of ‘qualifying spouse’.

“Therefore, the deceased’s former spouse who was his legal spouse at the date of his retirement is the ‘qualifying spouse’ in terms of the rules of the first respondent.

“The board was not aware of the existence of the complainant and did not allocate part of the death benefit to her.

“The death benefit was paid in terms of the rules of the first respondent and the Act. Therefore, the complaint should be dismissed,” said Ms Lukhaimane.

 

Quick Polls

QUESTION

How confident are you that insurers treat policyholders fairly, according to the Treating Customers Fairly (TCF) principles?

ANSWER

Very confident, insurers prioritise fair treatment
Somewhat confident, but improvements are needed
Not confident, there are significant issues with fair treatment
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now