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Pension funds made to compensate beneficiaries

By Jessica Anne Wood

The Office of the Pension Funds Adjudicator released two statements regarding incidents where pension funds had not followed the correct steps and procedures in dealing with the claims made by beneficiaries.

One of the cases pertained to a death and the benefits owing to the deceased’s beneficiaries, while the other was an incident of identity fraud where the pension fund member did not receive his pay-out due to a failure by the pension fund to notice discrepancies in the documents submitted for the pay-out.

The Pension Funds Act highlighted that a pension fund has 12 months in which to identify dependants of the deceased, allocate and pay a death benefit. Furthermore, Muvhango Lukhaimane, the Pension Funds Adjudicator, noted that there is an onus on the part of a pension fund to ensure that payment is being made to the correct person.

Fraudulent benefit pay-out

In one case recently brought before the Pension Funds Adjudicator, a benefit of R753, 549.46 was paid to someone not entitled to the benefit. In this case the complainant was J Louw, who submitted a complaint against Implats Pension Fund, Sanlam Life Insurance Limited, and Marula Platinum Mine, claiming that they had not paid him his withdrawal benefit.

In 2013, Louw took steps to finalise his pension withdrawal limit case with the parties involved. In June 2016, he followed up with the relevant party and was informed that the money was paid into his First National Bank (FNB) account. However, Louw did not and does not have an FNB account.

Upon viewing the supporting documents for the claim that were sent to him, Louw discovered the following discrepancies:

  • The identity document was false, with a different photo and no watermark.
  • The photo on the identity document was one of a white male, whereas he is coloured.
  • Suid Afrika was the country of birth on the complainant’s identity document whereas the false identity document had South Africa as country of birth.
  • The application was completed in two different handwritings, not that of the Louw.
  • The signature on the documents was not Louw’s.
  • The address reflected Centurion as Louw’s address whereas he lived in Eesterus, Pretoria.
  • The banking details on the claim form reflected an FNB account although he only utilised a Standard Bank account which was on record with Marula Platinum Mine.

The Pension Funds Adjudicator found that the companies involved in the complainant failed to do the proper checks with regards to the documentation, considering that upon signing up to a fund, the fund is required to keep records to cross check and verify the information in its possession when the member withdraws from the fund.

Lukhaimane said: “It is common cause that the identity document used to claim the withdrawal benefit is not that of the complainant (Louw). Thus, the first respondent (Implats Pension Fund) failed to verify the details of the person claiming such a withdrawal benefit and subsequently paid the benefit to an unknown person.

“This is an indication that the first respondent’s controls are either weak or non-existent. The submissions indicate that fraud has been committed against the first respondent and not the complainant.”

Furthermore, the Adjudicator stated that the Pension Funds Act provides that the duties of the board of the pension fund is to ensure that proper systems of control are employed by and on behalf of the board. According to the Adjudicator Sanlam Life Insurance Limited failed to perform these statutory duties, resulting in the R753 549.46 benefit being paid to the wrong person.

Following the investigation, the Pension Fund Adjudicator concluded that Louw was entitled to his benefit from Implats Pension Fund, plus interest.

Delayed death benefit payment

The payment of a death benefit amounting to R244 073.66 was delayed to the beneficiary MJ Mhlanga following the death of his brother. The investigation by the Pension Funds Adjudicator found that the Mineworkers Provident Fund failed to investigate the death of its member (Mhlanga’s brother) within the 12 month prescribed period.

Lukhaimane highlighted: “This Tribunal, like any court of law, has the power to grant compensatory damages in order to mark its displeasure with the conduct of a body if circumstances fit.

 “Considering the fact that the respondent was notified of the deceased’s demise in October 2014 and did not investigate the matter until now, it should be ordered to pay the deceased’s beneficiaries the available death benefit of R244 073.66 plus 10% in compensatory damages for its delay to complete its investigations.”

If you have any concerns or complaints with your pension fund and feel that they have not been handled well, you can contact the Office of the Pension Funds Adjudicator via www.pfa.org.za or on 012 346 1738.

 

 Handy tip: Haven’t planned for your retirement yet? You can apply for retirement products on Justmoney.

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