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Looking past the claim period to pay back the money

13 October 2015 Jonathan Faurie

In September we highlighted the fact that there are a number of unclaimed death benefits sitting at the desk of the Financial Services Board (FSB). While some may think that this is a case of fund administrators not doing their jobs, there are some cases where they do endeavour to track down beneficiaries, but ultimately struggle to do so.

This is particularly rife in the mining industry where a number of beneficiaries of these unclaimed treasures live in rural communities and can be difficult to track down. This was the basis of a recent determination by the Pension Funds Adjudicator (PFA) who ordered Mineworkers Provident Fund (respondent) to investigate and pay a death benefit although a complaint was time barred as it was received outside of the prescribed time limit.

The basics

DA Olehile complained to the PFA that the respondent had failed to allocate and distribute a death benefit in the amount of R135 285 following the death of her husband on 23 November 2001.

The complainant said she needed the money to support her children – aged 19 and 17– born from her relationship with the deceased.

The respondent submitted the benefit claim forms almost 14 years since the deceased had passed away, There were also concerns that she already claimed the death benefit in 2004. At the end of the day, there were no records to prove that she lodged a claim before the expiry of the prescribed three-year minimum period permitted in terms of the Pension Funds Act in order for her complaint to be investigated.

However, due to the potential consideration of accepting the claim, the respondent said it would not rely on the late submission period as a reason not to investigate and pay the death benefit.  

Reasons for the delay

The respondent said that upon receipt of the complaint, it carried out a detailed investigation and discovered that certain documents were outstanding and delaying the process of finalising the claim.

The respondent also submitted that it required confirmation whether or not the deceased was maintaining his mother before they made a final decision on who all of the beneficiaries in this case were.

Commendable actions

In her determination, Muvhango Lukhaimane, the PFA, said the fund’s stance to accommodate the claim after the prescribed three-year minimum period was commendable as it helped reduce the amount of unclaimed benefits held by retirement funds.

However, she said the board had 12 months to identify the dependants of the deceased and allocate and pay a death benefit.

“The respondent submitted that it does not have record of this claim. However, the respondent should be aware of the death of the deceased as he was its member. Therefore, the board failed to investigate the matter in terms of the section 37C of the Pension Funds Act,” said Lukhaimane.

She added that more than 14 years had passed with the respondent not having completed its investigation. She further stated that the respondent failed to provide a satisfactory explanation as to the delay in the investigation.

As a result of the respondent’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.

Time for change

While the Pension Fund Act of 1956 has served the industry well, there are a few issues that need to be taken into account and the act possibly needs to be amended in order to address these issues.

If we specifically focus on the mining industry, because that is the nature of this particular determination, we are faced with a number of challenges; the first being that the majority of workers in the mining industry are in fact migrant labourers. The challenge with this is that their beneficiaries often live in rural areas and are hard to track down because they may not live in a specific town.

The second challenge that needs to be overcome is the fact that because these beneficiaries live in rural areas, they may not be timeously informed that they are in fact beneficiaries of death benefits. When they do find out, it may be past the deadline for the submission.

The third challenge is the education level of beneficiaries. A major challenge in the above determination was the fact that the beneficiary did not fill in the required forms properly. This is a challenge because they simply may not know how to do it. Another challenge which is tied to this one is the fact that the forms are often in English or Afrikaans, languages which may not be spoken in rural areas. And even if they are spoken, their level of reading or writing in these might be poor.

Bearing the above in mind, we need to revisit the Act and make the necessary amendments. If the rules of an Act do not address challenges which are not deliberately caused by beneficiaries, are the beneficiaries being treated fairly?

Editor’s Thoughts:
At the end of the day, it will not adversely affect the industry to extend the claim period in order to make sure that these challenges are resolved. If we are not taking a big stick approach to regulation, we need to create platforms to discuss how customers can be treated fairly by all levels in the value chain. This includes existing regulation. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts

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