Looking for practicality as PFA determinations stream in
Death is never an easy thing to deal with. This is especially true when it comes to dealing with the distribution of death benefits.
The Office of the Pension Funds Adjudicator (PFA) recently had to deal with a particularly sensitive determination, and yet more complaints against the security industry.
The strange decision
The first case dealt with the apparent unequitable distribution of funds. Following the deceased’s demise, a death benefit of R6 828 086 became available for distribution to the deceased’s beneficiaries and dependants.
The death benefit was allocated and distributed as follows: life partner R3 082 000; major son (complainant) R882 000.00; major son R882 000 and minor daughter R1 982 086.
The complainant submitted that a few weeks before the deceased’s demise, his will was discussed with his friend who is a lawyer and he emphasised that he did not want his will to be changed, and that his assets be equally distributed amongst his children in the event that he passed away.
A call for practical thinking
Muvhango Lukhaimane, the PFA, set aside a R3 082 000 death benefit allocated to the partner after considering the complaint that the decision was not fair and equitable.
Lukhaimane ordered the board of the first respondent to re-exercise its discretion in terms of Section 37C of the Pension Funds Act.
Lukhaimane said the board of the first respondent had failed to consider relevant factors and ignored relevant ones in allocating the death benefit in the manner it did.
But the chips didn’t fall completely in the favour of the complainant. During the complaint, the complainant questioned the nature of the relationship that his father had with his partner saying that she should never have been seen as a major dependent.
Lukhaimane said based on the evidence, there appeared to be no doubt that the deceased and his partner lived together, shared a household, and had an emotional and intimate bond.
“It is imperative to note that the complainant, in his own version, indicated that the deceased lent some money to his partner to open a business, which is viewed by this Tribunal as an indication that both parties had a good inter-dependent relationship. In this regard, this Tribunal is convinced that the board of the first respondent acted correctly in identifying and considering the partner as a permanent life partner of the deceased.”
The erroneous industry
The second determination was against the security industry. Ms MS Mmazwi complained that Afguard (second respondent) had failed to timeously register as a participating employer with the Private Security Sector Provident Fund (first respondent), to timeously register her as a member thereof, and to pay all provident fund contributions on her behalf thus resulting in the understatement of her fund credit.
The complainant had been employed by the second respondent from 1 June 2004 and was still in its employment at the time of the complaint. She was a member of the first respondent by virtue of her employment.
The second respondent deducted provident fund contributions since commencement of employment. However, she claimed she did not receive benefit statements.
When she went to Absa Consultants and Actuaries (ACA), she was advised that she was not registered as a member of the first respondent.
Radio silence
The second respondent was afforded an opportunity to comment on the allegations made against it. No response was received from it.
According to the information obtained from the Companies and Intellectual Property Commission, the second respondent commenced its business in the private security sector on 19 July 1993 and was still in business.
The second respondent became a participating employer in the first respondent on 11 October 2006. The first respondent commenced on 1 September 2002. Thus, the second respondent ought to have registered itself as a participating employer on 1 September 2002 as it was already in business when the latter commenced. The second respondent failed to register timeously as a participating employer in the first respondent.
The complainant commenced her employment on 1 June 2004. Six months later she ought to have been registered as a member of the first respondent. The second respondent failed to comply with the fund qualification service as set out in the first respondent’s rules as the complainant appeared in the contribution schedules of the second respondent from January 2009.
Coming down hard
Lukhaimane said that according to the submissions, the second respondent failed with the payment of provident fund contributions on behalf of the complainant for the period December 2004 to date. Such default was in breach of Rules 4.3.1 and 4.3.2 of the Rules of the first respondent as well as section 13A of the Act.
“Unfortunately, this scenario is not isolated. It has been a feature of the first respondent lately, to submit responses to complaints that are erroneous and less than plausible,”
“This points to the lack of proper record keeping by ACA and is a violation of section 7D of the Act. For this reason, this matter is being referred to the Registrar of Pension Funds (“Registrar”) for her attention,” said Lukhaimane.
Lukhaimane ordered the second respondent to register as a participating employer with the first respondent with effect from 1 September 2002.
The second respondent was ordered to register the complainant as a member of the first respondent with effect from December 2004 to date.
Editor’s Thoughts:
It is imperative that a high level of skills is needed when dealing with the distribution of death benefits. The comments of Lukhaimane in the first case that proper investigations were not undertaken is distressing and needs to be resolved. In this way, determinations will decrease. Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts [email protected].
Comments
As far as good record keeping by fund administrators (ACA), where were the regulators as they should be doing inspections to ensure that rules are being followed. Report Abuse