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Adjudicator probes two funds

Jun 10 2011 13:15 Sapa

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Johannesburg - Two provident funds will face an investigation into possible gross dereliction of duty after two claimants had to wait years for death benefits, the pension funds adjudicator (PFA) said on Friday.

In the first case, a KwaThema woman complained to the acting PFA Dr Elmarie de la Rey in June 2008 that the Food and Allied Workers Union Provident Fund had not paid out a benefit following the death of her partner in September 2005.

In response to inquiries by the PFA, the provident fund confirmed membership of the deceased and said a resolution of the trustees was still awaited.

It was still outstanding by August 2010 and the PFA was told that the trustees had 12 months to trace the deceased's dependants and effect payment of the benefit.

The provident fund said the duty to pay was not determined by the expiry of that period, but whether the board was satisfied that it had investigated and considered the matter properly enough to make an equitable allocation.

"No convincing reasons have been advanced by the respondent to explain the inordinate delay in the distribution of the deceased's death benefit, other than that the trustees' resolution is still outstanding. This explanation is unacceptable," said De la Rey.

She ordered the provident fund to pay the death benefit, together with interest at 15.5% per annum computed from September 18, 2005 to date of payment, to the dependants of the deceased within 14 days of June 6, 2011.

In another case, a woman from Mahikeng complained to the PFA that Bosele National Provident Fund had delayed paying out the death benefit to the dependants of a man who died on January 30 2004.

They were told the payment was "in progress" but because they were migrating to a new computer system, it suspended contributions and payment of benefit claims until May 22 2009.

On June 19 2009 it said it could not migrate the data for "technical reasons" and it had escalated the matter to the "highest authorities".

But by May 2011 the respondent had still not paid the death benefit.

De la Rey said by not paying out, the fund had failed to discharge its duties.

"The respondent's negligence cannot be condoned by this tribunal. The respondent's failure to migrate its data over a lengthy period of time cannot be a justifiable excuse for the delaying in paying the death benefit."

The respondent was ordered to pay the death benefit, together with interest at 15.5% per annum computed from January 2004 to date of payment, to the man's dependants within 14 days of June 6 2011.

"In this case too, a copy of this determination was to be forwarded to the registrar of pension funds as well as the head: surveillance and enforcement, registrar of pension funds, for possible action against the trustees of the respondent for what would appear to be a gross dereliction of duties by the trustees," De la Rey said.
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