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PFA is swamped by complaints of non-payment of death benefits

08 May 2014 Muvhango Lukhaimane, Pension Funds Adjudicator

The non-payment of death benefits continues to plague the Office of the Pension Funds Adjudicator.

In the first of three recent complaints concerning death benefits, TI Miya complained that the beneficiaries had not been paid by the Private Security Sector Provident Fund (first respondent) following the death of his brother DM Mbongo who had been employed by Champion Security Services cc (second respondent) from 20 December 2010 until 16 August 2013.

He told Pension Funds Adjudicator Muvhango Lukhaimane that after the death of his brother, the second respondent gave the deceased’s family an amount of R3 000.

He indicated that the second respondent offered to give them a cheque for R5 500 but they did not sign for the cheque.

He said when asked about the outstanding amount, the second respondent further offered them a cheque for R14 000but again they did not sign for it.

The complainant attached a copy of the deceased’s payslip as proof that an amount of R204.98 was deducted monthly from the deceased’s salary. He requested the Tribunal to compel the first respondent to provide a breakdown of the deceased’s contributions and pay the death benefit.

The first respondent submitted that the second respondent was not its participating member and hence no death benefit payment was due. It further submitted that it did not receive an application for exemption from the second respondent.

The second respondent submitted that it gave the sum of R3 000to the deceased’s family to assist with the burial. It stated it had advised the complainant to furnish it with a letter of executorship before any information could be released to him.

In her determination Ms Lukhaimane said the payment of any benefit due to a member of a fund was regulated by the fund’s rules and Section 13 of the Pension Fund Act.

She said the first respondent submitted that the second respondent was not its participating member and it did not receive an application for exemption from the second respondent and no exemption had been granted.

The deceased was an eligible employee in terms of the rules of the first respondent. Thus the deceased and the second respondent qualified to participate in the first respondent.

The second respondent ought to have joined the first respondent as a participating employer.

The second respondent had a duty placed on it by the Pension Fund Act and the rules of the first respondent to pay contributions and submit schedules to the first respondent indicating on whose behalf payment was being made, and the first respondent in turn had a duty to pay out benefits to the members.

Ms Lukhaimane ordered that the deceased’s beneficiaries should be put in as good a position as if the wrong had not been committed.

The first respondent was ordered to calculate the amount of the death benefit that would have been payable to the deceased’s beneficiaries had the second respondent registered itself and the deceased as members of the first respondent and paid contributions on his behalf to the first respondent.

In another matter, ML Talesaid no death benefit had been paid out by the Road Freight and Logistics Industry Provident Fund (first respondent) or Salt Employee Benefits (Pty) Ltd(second respondent) following the death of his father TI Kolobi who had been employed by Truckmec (Pty) Ltd (third respondent) from 1 September 2009 until 2 July 2010.

The deceased is survived by his son, ML Tale, and daughters GWN Sebokolodi, NL Manyanisa and MR Nkomo.

The complainant said he began claiming the death benefit in October 2011. He said when he contacted the second respondent, he was told they were busy updating their system and they did not receive the claim forms which he had submitted.

He requested the first respondent to pay the death benefit to the deceased’s beneficiaries.

The second respondent submitted that its records reflected that the deceased joined the first respondent in September 2009. It was appointed in April 2012 to conduct a reconstruction project of the first respondent which was in its final stages. Employers were requested to provide it with the outstanding data required to verify the contributions paid for members.

The second respondent said it had received contributions for October 2009 until February 2010 on behalf of the deceased. It had requested the third respondent to furnish forms for 2010 and 2011 and proof of payments for such monthly contributions to the first respondent. The information from the third respondent had not been received.

In her determination, Ms Lukhaimane said the second respondent had not indicated what steps it took to obtain the said information after the claim was submitted.

She said the third respondent had a duty placed on it by the Pension Fund Act and the rules of the first respondent to pay contributions and submit schedules to the first respondent indicating on whose behalf payment was being made. The first respondent in turn had a duty to pay out benefits to the members.

She ordered that the deceased’s dependants and/or beneficiaries should be put in the position they would have been in had the third respondent paid all the deceased’s contributions timeously. The first respondent was ordered to pay the identified beneficiaries the death benefits due to them.

In yet another complaint, TC Khadiwas unhappy she had not received a death benefit from Univen Provident Fund (first respondent) and its administrator Sanlam Life Insurance Limited (second respondent) following the death of her spouse SM Mukoma on 15 July 2010.

The following were the deceased’s nominated beneficiaries: his wife TE Mukoma (40%), his daughter RMF Mukoma (30%), another daughter Rolivhuwa Mukoma (25%) and his brother Fulufhelo Mukoma (5%).

Following the deceased’s death, a gross death benefit in the amount of R1 311 250.00 became available for distribution. An amount of R303 232.74 was deducted in respect of tax and an amount of R174 979.60 was deducted to settle the deceased’s outstanding housing loan.

Upon investigation, the board of the first respondent distributed the death benefit as follows: complainant TC Khadi (nil); wife TE Mukoma (50%- R441518.83); daughter RMF Mukoma (2% - R17 660.74); daughter R Mukoma (3% - R26 491.11); daughter V Mukoma (14% - R123 625.27); daughter N Mukoma (14% - R123 625.27);daughter M Mukoma (15% - R132 455.65); father ZP Mukoma (1% - R8 830.38) and mother MF Mukoma (1%- R8 830.38).

The complainant was dissatisfied with the first respondent’s decision to totally exclude her when allocating the death benefit.

Later the first respondent resolved to allocate 10% of the death benefit to the complainant, amounting to R88 771.66. However, she was not happy with the offer and did not accept it.

She said she had three children born from herrelationship with the deceased. She and her children were staying together with the deceased at the time of his death and were financially dependent on him.

The complainant submitted that the 50% allocation made to Mrs TE Mukoma was too high and unfair considering that she was the sole heir of the deceased’s estate, which was allegedly worth over R2-million.She felt that the disparity between the allocations made to her (10%) as compared to that of Mrs TE Mukoma was unfair and unreasonable under the circumstances. She requested an allocation that was equivalent to that of Mrs TE Mukoma.

In her determination, Ms Lukhaimane said although the deceased may have expressed an intention to benefit a certain beneficiary in the nomination form, it did not necessarily imply that the nominee would in fact be awarded anything.

"In terms of the Pension Fund Act whose primary purpose is to protect those who were dependent on the deceased during his lifetime, it is the board’s responsibility when dealing with the payment of death benefits to conduct a thorough investigation to determine the beneficiaries, decide on an equitable distribution and finally to decide on the most appropriate mode of payment of the benefit payable,” said Ms Lukhaimane.

She said it was evident from both the submissions of the first respondent and of the complainant that the deceased and the complainant lived together as husband and wife in the house that was allocated to the deceased by his employer.

The complainant’s minor children born from her relationship with the deceased were financially dependent on the deceased until his death.

"What remains to be determined is whether or not the board acted equitably in the allocation of the death benefit to the identified dependants. Equity requires that the needs of all the dependants be considered.

"The complainant made submissions which the board appears not to have canvassed when exercising its discretion.

"The complainant’s objection on the 50% allocation made to Mrs TE Mukoma is based on the submission that Mrs TE Mukoma is the sole heir of the deceased’s estate, which is allegedly worth over R2-million.

"She submitted that the deceased’s estate includes a taxi business and a driving school.

"In support thereof the complainant provided this Tribunal with the deceased’s will or testament, which states Mrs TE Mukoma as the sole heir of the deceased’s estate.

"She also stated that Mrs TE Mukoma’s children also benefited from a group life cover which places her in a better financial position as compared to her children who only benefited from the death benefit.

"The board’s investigation revealed no investigation on the complainant’s submission in relation to the financial circumstances of Mrs TE Mukoma and her children.

"Instead, the board based its decision on Mrs TE Mukoma’s marital status with the deceased and what she submitted to the board as her monthly financial commitments.

"It appears that the board felt obliged to allocate 50% portion of the benefit to Mrs TE Mukoma because of the existence of marriage and that the marriage was in community of property.

"Death benefits are not allocated on the basis of the existence of marriage between a deceased member and a claimant.

"Even if no marriage relationship existed between the deceased and the claimant, it suffices if such a claimant shows to the board’s satisfaction that she was in fact financially dependent on the deceased.”

She said the first respondent’s board did not properly investigate the financial circumstances of the beneficiaries and did not seem to have considered the alleged inheritance that Mrs TE Mukoma received from the deceased’s estate in order to make an equitable distribution amongst the beneficiaries.

"It is not clear how the 10% allocation made to the complainant was arrived at, as well as the 50% allocation made to Mrs TE Mukoma.

"It is further not clear how the financial circumstances of Mrs TE Mukoma are far worse off as compared to those of the complainant to justify the huge disparity between allocations,” said Ms Lukhaimane.

She ordered the allocation of the death benefit by the board of the first respondent to be set aside. The first respondent was directed to re-exercise its discretion in respect of the death benefit that was paid to the deceased’s beneficiaries.

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