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PFA says beneficiaries deserve compensation for undue delays

22 August 2023 The Office of the Pension Funds Adjudicator
 Muvhango Lukhaimane

Muvhango Lukhaimane

The Office of the Pension Funds Adjudicator has been inundated by a raft of complaints about unnecessary delays in the payment of death benefits.

Three recent cases involved Old Mutual Superfund Provident Fund with Old Mutual Life Assurance (SA) Limited being the administrator,

Although the Adjudicator, Muvhango Lukhaimane, dismissed the three cases as the benefits were eventually paid, she had some strong words for the tardy manner in which the fund had acted. In all three cases, she said had she had the powers, she would have granted compensation to the complainants for the delays they had suffered.

In one complaint, the spouse of the deceased said she was aggrieved with the delay in the payment of the deceased’s death benefit. She had claimed a death benefit on 29 December 2021. Although she had provided the fund with all the requested information, she had not received payment of the death benefit of R229 593.57 up to the time she complained in November 2022.

In her determination, Ms Lukhaimane said the deceased passed away on 20 November 2020. The complainant claimed the death benefit on 29 December 2020. The board decided on the allocation of the death benefit on 17 November 2022. In terms of section 37C of the Act, the board has 12 months from the date it became aware of the death of the deceased to finalise its investigation. In this case, the fund decided on the allocation of the death benefit almost two years after the death of the deceased.

Ms Lukhaimane said the fund had claimed in a previous matter that due to the excess deaths brought by the Covid-19 pandemic, it had overrun its capacity to adequately deal with the high influx of new death claims, which caused a backlog of claims.

“The fund does not seem to have put any contingency plans to mitigate the effect of delays on beneficiaries, which is unacceptable.

“Had the Adjudicator been clothed with powers to grant compensation for this undue delay, she would have done so.

“Moreso, the fund does not even offer an apology for the unacceptable manner it has gone about discharging its duties. Therefore, the Adjudicator finds that the fund unduly delayed the allocation of the death benefit. The deceased’s beneficiaries suffered prejudice due to the conduct of the fund.”

The complainant was requested to confirm whether she was satisfied with the payment. No further submissions were received from the complainant. The Adjudicator was satisfied that the complainant was paid her portion of the death benefit and the complaint was dismissed.

In another similar matter, upon the death of the deceased, a lumpsum death benefit of R288 082.89 became available for distribution to his dependants. The complainant said despite submitting all relevant documents to the fund, payment of the death benefit was delayed.

The fund submitted that on 22 April 2021, it sent the death claim to an external service provider to investigate. The investigation was concluded on 16 November 2022. On 25 November 2022, the board resolved to allocate the entire death benefit to the complainant as the sole legal and factual dependant of the deceased.

Ms Lukhaimane, in her determination, said the fund decided on the allocation of the death benefit, almost two years after it was notified of the death of the deceased.

Although the fund had claimed that Covid-related deaths had caused a backlog of claims, in this instance, however, the fund appointed a service provider, ostensibly to speed up the investigation.

“The service provider continues to sit on the investigation for more than 12 months. The level of service experienced by the complainant at her time of need from the fund is completely below par and unacceptable. It does not even seem as if the fund offered any apology for its lacklustre performance,” said Ms Lukhaimane.

On 13 February 2023, the investigator attempted to contact the complainant to confirm receipt of payment of the death benefit without success. No further submissions were received from the complainant. The Adjudicator was satisfied that the complainant was paid the death benefit from the fund. Therefore, the complaint was dismissed.

In the third matter, the deceased was a member of the fund until she passed away on 8 June 2020. The complainant was the sister of the deceased. A lumpsum death benefit of R209 450.31 became available for distribution. The complainant was dissatisfied with the delay in payment of the death benefit.

The fund submitted that due to an internal error, the documents were not correctly classified as death claim documents resulting in the claim being overlooked. The fund only became aware of the death claim when it received this complaint from the Adjudicator.

In her determination, Ms Lukhaimane said the fund decided on the allocation of the death benefit more than two years after it was notified of the death of the deceased.

“It is a pity that the Adjudicator does not have authority to grant compensation for an instance of this nature, because if she did, this is one matter where a fund deserves to be punished; because it is unlikely that the complainant did not do any follow-ups with the fund, which also have gone unanswered,” the Adjudicator said.

The death benefit was paid on 6 March 2023, into a beneficiary fund. The Adjudicator was satisfied that the deceased’s death benefit had been paid and the complaint was dismissed.

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