PFA slates fund for waiting 27 years for claimants to pitch

02 April 2024 The Office of the Pension Funds Adjudicator (OPFA)
Muvhango Lukhaimane

Muvhango Lukhaimane

A provident find has been slammed by the Pension Funds Adjudicator for waiting 27 years before a beneficiary came forward to claim a death benefit.

Muvhango Lukhaimane accused the Metal Industries Provident Fund of dereliction of its fiduciary duties.

“For the board to wait for over 27 years since it was notified of the deceased death until the complainant approached it is inexcusable and unconscionable.

“As a result of the fund’s dilatory conduct, the deceased’s beneficiaries suffered prejudice,” said Ms Lukhaimane.

The deceased was employed from March 1984 until he passed away on 28 May 1995. He had been a member of the Metal Industries Provident Fund. Upon the death, a death benefit of R1 694 933.73 became available for distribution to his beneficiaries.

The deceased’s daughter was to receive a death benefit of 76.13% or R1 290 349,29; a nephew was to receive 15,91% or R269 772,96; and a brother was to receive 7,96% or R134 861,48.

The complainant who is the daughter of the deceased said she only found out which fund held the deceased’s death benefit in February 2022 after making enquires with different funds.

She applied for the deceased’s death benefit on 20 April 2022 and was awarded a lump sum portion in May 2023. She indicated that she was informed that she will be paid in full after 30 days. However, when she followed up with the fund, she was informed of the board’s resolution to pay the balance to the other two beneficiaries.

The complainant requested the Adjudicator to order the fund to pay her the remaining balance of the deceased’s death benefit as she is the sole beneficiary.

The fund submitted that the complainant received an amount of R346 318.92 on 20 May 2023 and the balance of R944 030.37 on 22 August 2023.

The fund submitted that the three beneficiaries were listed as the deceased’s children in the form. The complainant had indicated to the fund that she does not know the whereabouts of the deceased’s nephew as he is homeless and lives on the street. No information was received by the fund regarding him.

The fund stated that following the death of the deceased and upon receipt of the application for the death benefit, it conducted an investigation as required by section 37C of the Act. Its aim was to identify any potential dependants of the deceased and to distribute the death benefit between them and, if considered appropriate, nominated beneficiaries in a just and equitable manner.

The board resolved to allocate the death benefit “in a just and equitable manner between the deceased’s beneficiaries”.

“All the relevant factors that had the potential of impacting on the distribution of the benefit, were taken into consideration. In that regard, the board exercised its discretion in the distribution of the death benefit. The complainant received payment of her benefit in full; there are no further benefits due to her,” the fund said.

In her determination, Ms Lukhaimane said a fund has 12 months within which to trace and identify the possible beneficiaries that might share in the benefit. However, she said, this is not a hard and fast rule as everything depends on whether the board has conducted a proper investigation within a reasonable time.

She said the fund submitted that it was notified of the deceased’s death in August 1996 and in terms of section 37C of the Act, the 12-month period from the date the fund was notified of the deceased’s death expired in August 1997.

She said the fund did not provide clarity on what caused the delay in finalising the investigation. Thus, the fund failed to provide the Adjudicator with cogent reasons that prevented it from timeously concluding its death benefit investigation.

“The conduct of the fund in taking such a long time in finalising the death benefit claim is viewed in a dim light.

“The board has not made any effort to trace the other two beneficiaries except to reply on the information provided by the complainant. For the board to wait for over 27 years since it was notified of the deceased’s death until the complainant approached it is in excusable and unconscionable.

“It is clear that the board failed to conduct a proper investigation within a reasonable time to the extent that there is an allegation that one of the beneficiaries is homeless and living on the streets whilst there is a benefit due.

“The fund must make effort to obtain further information on the two beneficiaries. This is clearly an untenable situation that requires positive action to be taken by the board.

“It does not appear that the board has any plans to progress the matter except to wait for the dependants to pitch. For the board to do nothing but wait when the benefit is needed for maintenance is a dereliction of fiduciary duties.

“As a result of the fund’s dilatory conduct, the deceased’s beneficiaries suffered prejudice in that they have potentially been denied access to benefits which may have become available to them had the investigation been completed in time and payment was made timeously,” said Ms Lukhaimane.

She set aside the board’s decision and ordered the board to trace the remaining beneficiaries by no later than 15 February 2025, failing which the remaining death benefit must be allocated and paid to the complainant.

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