The Pension Fund Adjudicator has strongly condemned the conduct of a woman from Musina in Limpopo as greedy when she requested the trustees grant her the full payment of her life partner’s death benefit.
In addition to his life partner, the deceased was survived by his mother and four biological children.
The member had saved R1.6m and the trustees of his fund, PSQ Wealth Retirement Annuity Fund, distributed the benefit as follows: The life partner received 80%, the two children each received 5%, and 10% went to the mother. The other two children were left empty-handed.
The life partner argued that she was 57 and almost retired. She also argued that the two children who benefited were still young and employed and that her deceased partner’s mother had six children who all still supported her in various ways.
The woman further argued that the mother had been awarded R625,632 from another retirement annuity the member had with Discovery, while the two children each received R154,000, amounting to 5% apiece of the total R3m benefit. What she failed to declare was that she received 69% of the Discovery Retirement Annuity Fund.
“It is clear the complainant was not left destitute because of the death of the deceased … it demonstrates the greed of some dependents,” Pension Fund Adjudicator Muvhango Lukhaimane wrote in her 2017/2018 annual report.
Apart from the greed, the case has shone the spotlight on the important role of the board of trustees of a fund and how nominated beneficiaries cannot take it for granted that they are automatically entitled to a portion of the death benefit.
In her determination, Lukhaimane said it was the board’s responsibility when dealing with the payment of death benefits to conduct a thorough investigation to determine the beneficiaries, and then to “decide on an equitable distribution and finally to decide on the most appropriate mode of payment of the benefit payable”.
In terms of Section 37C of the Pension Funds Act which regulates the payments of death benefits, the board of trustees must: Identify dependents and those the deceased member has nominated to receive the benefits;
Make the benefit allocations on an equitable basis; and
Determine an appropriate mode of payment of the death benefit. Section 37C also refers to a 12-month waiting period from the date of death and identifies three types of dependents: Legal dependents – there is a legal duty to support such a person (spouse, children);
Factual dependents – where the deceased had no legal obligation to support these people but did so anyway;
Future dependents – persons where if the deceased did not die, would have been supported (fiancé, elderly parents). The office of the adjudicator says in the report: “In making their decision, trustees need to consider all relevant information and ignore irrelevant facts. Further, the trustees must not rigidly adhere to a policy or fetter their discretion in any other way.”..