You must be dead for death benefit to be paid out, PFA rules

A death benefit only becomes payable on the demise of a member – it cannot be paid while the member is still alive.

This is the gist of a determination by acting Pension Funds Adjudicator Dr Elmarie de la Rey after a bus driver complained that since a death benefit was part of his contributions to a pension fund, he was entitled to be paid the death benefit over and above the withdrawal benefit of R25428 .53 that he was paid.

The complainant (name withheld) submitted that Old Mutual Superfund Pension Fund (first respondent”) and its administrator, Old Mutual Corporate (second respondent), had failed to pay him a death benefit for the period he worked from November 2000 until his employment was terminated on 29 February 2008.

In response to the Office of the Pension Funds Adjudicator, the first and second respondents said the death benefit that the complainant has referred to was not part of the withdrawal benefit, but a group life assurance cover. The group life assurance cover would have become payable to the complainant if he had died while still in service.

The complainant did not understand his withdrawal entitlement in terms of the rules of the fund. The withdrawal benefit that was paid to the complainant was his full and final entitlement from the fund.

In her determination, Dr De la Rey said in terms of the fund’s rules, a death benefit becomes payable to a member’s beneficiaries if he dies before retirement.

The complainant was still alive when he exited the first respondent. He was also still alive when his withdrawal benefit was paid.  “A death benefit is only payable after the member’s death and while he is still a  member of the fund.

“In light of the above, the complainant is not entitled to receive a death benefit in  terms of the first respondent’s rules and the respondents paid the correct benefit to  him,” said Dr De la Rey, thus dismissing the complaint.