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Pension funds in the spotlight for conduct

By Jessica Anne Wood

The Pension Funds Adjudicator has reprimanded two pension funds for their behaviour. The first (Mineworkers Provident Fund) was reproached for “its tardy conduct which has resulted in a death benefit remaining unpaid for seven years,” revealed the Adjudicator.

The second, Metropolitan Retirement Annuity Fund was referred to the Adjudicator for apparent non-compliance with the Pension Funds Act through “giving effect to a defective court order.”

Mineworkers Provident Fund

The complainant, Ms BM Dibakwana, claimed that she had submitted all relevant documents to the pension fund following her husband’s death in October 2008. According to the Adjudicator, “the respondent had ceased its investigation until it received the complaint, claiming it had not received the relevant documents.”

The Adjudicator explained: “Upon the death of the deceased, a death benefit became available for distribution between the beneficiaries of the deceased. However, the respondent failed to allocate and distribute the death benefit. The death benefit as at 9 March 2016, was in the amount of R224 745.42.”

According to Dibakwana, she had been communicating with the pension fund since her husband’s death but to no avail. In response, Mineworkers Provident Fund claimed that it was still awaiting documentation, and that upon receipt of these documents the case would be processed and the money paid to the beneficiaries.

Muvhango Lukhaimane, the Pension Funds Adjudicator, stated that in terms of the Pension Fund Act, the board of management has a duty to “identify the beneficiaries of a deceased member and make payment of the benefit within 12 months of the death of the member.” In this case she noted that the board had failed to respond in the prescribed time.

Lukhaimane concluded: “The respondent should source the beneficiary nomination form directly from the employer and clarify with the complainant, which family witnesses ID copies are required.

“It is the duty of the respondent to gather all the information. The respondent should travel to the complainant in order to obtain all the required documents. However, any costs incurred in finalising his claim cannot be defrayed from the death benefit.”

Metropolitan Retirement Annuity Fund

According to the Pension Fund Adjudicator, “a ’large and experienced’ player in the pension industry should have known better than to have enforced a defective court order.”

This followed from a complaint by Ms KJ Guild who claimed that she was unhappy with the payment of pension interest following her divorce.

The details of the case were as follows: “The marital bond between the complainant and her former spouse was dissolved in terms of the divorce order issued on 29 November 2013 by the Southern Gauteng High Court in Johannesburg.

“The relevant part of the settlement agreement which was made an order of the court was that the proceeds of a retirement annuity policy in the former spouse’s name be paid to the complainant upon maturity on 1 April 2018.”

Guild claimed that she was paid R138 573 when the value of the policy was R204 171, and that this was not in accordance with the divorce order. Furthermore, she stated that she was informed by a second respondent (MMI Group Limited) that the first respondent (Metropolitan Retirement Annuity Fund) “could not pay her the entire amount in terms of the Divorce Act.”

In accordance to legislation, the fund could not pay the entire benefit, but only 100% of the value of the pension interest calculated up to the date of divorce. In her findings, Lukhaimane noted that the decree of divorce which granted Ms Guild the full proceeds of the policy did not comply with the Divorce Act

Lukhaimane stated: “This Tribunal views the first respondent’s conduct of giving effect to a defective order which is non-compliant with the provisions of the Pension Funds Act and the Divorce Act, as abetting the transgression of legislation and a court order and deserving of deprecation.

“As a large and experienced player in the industry, the second respondent should have considered that enforcing an invalid court order impacts on its seriousness to champion governance and compliance within its operations.

“Unfortunately, the horse has bolted as the complainant has already been paid the proceeds of the pension benefit. This Tribunal cannot aid any of the parties herein as the divorce order is non-compliant with legislative prescripts.”

These cases follow calls by the Pension Funds Adjudicator earlier this year for pension funds to treat customer fairly. At the time the Adjudicator noted that it was alarming the number of times that funds claimed to be treating customers fairly when they are not. To read more on this, click here.

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