Pensions watchdog slams mine fund for death benefit delay

Cape Town – The pension funds adjudicator on Monday spoke harshly about pension funds which fail to pay out death benefits to beneficiaries timeously, resulting in an increase in unclaimed benefits. 

The registrar of pension funds recently said that in the mining industry specifically there was R10bn worth of unclaimed benefits. 

“These amounts and the number of beneficiaries (who don’t receive death benefits) increase year on year,” Pension Funds Adjudicator Muvhango Lukhaimane said in a statement. 

READ: R10bn unclaimed. Are you on the list? 

She blamed this situation on the lack of expertise of some pension funds and their administrators in identifying beneficiaries on the one hand, and keeping accurate information on their members on the other. 

Lukhaimane illustrated these shortcomings with a specific case in which she ordered the Mineworkers Provident Fund to pay 10% in compensatory damages to a complainant, because the fund had failed to timeously investigate the existence of beneficiaries of a deceased member.

The amount due to the complainant was R656 195.56. 

She also ordered the fund to complete the investigation and ensure death benefits are paid to the member’s beneficiaries. 

Her ruling came after a complainant, who was a partner of a deceased member of the fund, approached her over the fund’s failure to pay a death benefit of R596 541.42. The member passed away on July 31 2004. 

The complainant wanted the fund to allocate a portion of the death benefit to her minor son (also the son of the deceased) for maintenance. 

READ: Retirement death benefit: fund trustees can override deceased member’s instructions

According to the complainant, the Mineworkers Provident Fund repeatedly told her it was still investigating the existence of the deceased’s “other beneficiaries”. 

When the claim against the fund was lodged, it raised “prescription” as a defence, which means the complaint was “time-barred” in terms of the Pension Funds Act. According to the legislation, people have a period of three years in which they can lodge a complaint with the pension funds adjudicator. 

The fund said that it contacted the deceased members’ beneficiaries, including the complainant, in August 2016, December 2016 and February 2017, reminding them to submit outstanding documents for the benefit to be paid out. 

In her determination, Lukhaimane ruled that the complaint against the fund was not “time-barred” in this instance, as there are particular circumstances under which the so-called prescription (three-year time period) may be interrupted. 

Although the complainant’s course of action arose on July 30 2005 when the death benefit was still unpaid, the fund itself acknowledged as recently as February 2017 that there was an unclaimed benefit when it contacted the deceased’s beneficiaries. 

READ: Pension complaints balloon by R10 000

“The respondent (the Mineworkers Provident Fund) is dishonest and disingenuous to raise prescription on unclaimed benefits,” Lukhaimane said in her determination. 

The fund failed to complete its investigation nine years after the death of the member, and as a result the beneficiaries suffered prejudice in being potentially denied access to the benefits they would have received had the probe been complete on time.