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PFA Ruling : Concerning the time period for the payment of death benefits

16 November 2006 PFA

The pension funds adjudicator issued 2 important rulings concerning the time period within which a death benefit should be paid.

In Mazibuko v Longefurn Provident Fund, the member passed away on 2 January 2004 and there was a death benefit payable by the fund.  The administrator of the fund submitted that it had not paid the benefit as it was awaiting a resolution from the board of management.  The complainant, lodged a complaint with the OPFA.

In Vinger v Mine Workers Provident Fund, the member passed away on 10 December 2004 as a result of which there was a death benefit payable by the fund. The fund submitted that it had not completed its investigation into the matter and therefore the benefit was not distributed.  The complainant, who was the executor of the estate lodged a complaint with the OPFA.

In both matters, the adjudicator held that Section 37C gives the board an unfettered discretion to distribute a death benefit among the dependants of the deceased in a manner and proportion that it is just and equitable. In exercising its discretion, the board must take into account a number of relevant factors, such as but not limited to: the ages of the parties, the relationship with the deceased, extent of dependence; financial affairs of the beneficiaries, and the wishes of the deceased.

The adjudicator held that that the law affords the fund a period of one year to conduct its investigation and locate the dependants of the deceased member.  In both matters more than 23 months had lapsed and there was no reasonable justification for the delay in payment, as a result of which the beneficiaries have suffered prejudice.

The adjudicator ordered the fund in both matters to conclude its investigation and pay the benefit together with interest, within 6 weeks of the ruling.

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