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Adjudicator slams pension funds for delaying payments

Retirement

Two retirement funds, the Municipal Employees Pension Fund and the Mineworkers Provident Fund, have been censured by the Pension Funds Adjudicator, Muvhango Lukhaimane, for unreasonably delaying or withholding payments to members or beneficiaries, with the principal officer of the former being referred to the Registrar of Pension Funds for investigation.

In the first case, in May 2016 Ms N lodged a complaint against the Municipal Employees Pension Fund, Akani Retirement Fund Administrators and the City of Tshwane Metropolitan Municipality. She had become eligible for a withdrawal benefit on July 31, 2015, when she left the employ of the municipality. No benefit had been paid to that date despite her submitting the required forms. Ms N said in her complaint that it appeared the municipality had mislaid the forms, because the forms had to be resubmitted.

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In its response to the complaint, the fund simply said that Ms N’s file was before the board of management for approval. The municipality failed to respond.

The adjudicator, in her determination, said the delay in the payment of Ms N’s benefit was unreasonably long and there was no justification for it.

“The pension fund states that the claim is awaiting the approval of the board of management. However, this is not a reasonable justification for the delay ... That the fund’s principal executive officer can sign off responses like this to this tribunal leads this tribunal to question her fitness to discharge her duties,” Lukhaimane said.

She said the Tshwane municipality had also failed Ms N. “It is essential for the employer to complete a withdrawal notification form indicating the cause of the termination of employment. This, in turn, allows the fund to determine which benefit is payable.

“In the absence a response from the [municipality], this tribunal concludes that the third respondent failed to comply with its duty of good faith in terms of assisting Ms N to claim her withdrawal benefit within a reasonable period following her exit from service.”

Lukhaimane ordered the fund to pay the benefit immediately, and said she was referring the determination to the Registrar of Pension Funds with a request that it consider an enquiry into whether the principal executive officer is fit and proper to serve as such in terms of the Act.


DEATH BENEFIT

The Pension Funds Act states that a pension fund has 12 months within which to identify the dependants of the deceased, allocate and pay a death benefit. To punish the Mineworkers Provident Fund for its unjustified delay in finalising such a matter, the adjudicator imposed “compensatory damages” of 10 percent over and above the death benefit.

In May 2016, almost two years after the death of his brother, Mr MM complained to the adjudicator that the fund had not paid out his brother’s death benefit. The brother, Mr JM, an employee of Harmony Gold Mining Company, died on August 11, 2014.  

In responding to the complaint, the fund appeared confused about whether the benefit had been paid and how much had been paid. It was eventually established that R244 073 was owing to Mr JM’s beneficiaries.

In her determination, Lukhaimane said boards of pension funds had 12 months to identify the dependants of deceased members and allocate and pay death benefits. In this case, the board had failed to investigate the matter within the prescribed period in terms of the Pension Funds Act.

Lukhaimane said Mr JM’s beneficiaries had been prejudiced in that they had been denied access to benefits that may have become available to them if the investigation had been completed in time.

She ordered the fund’s board to complete its investigation and equitably distribute the benefit among Mr JM’s beneficiaries, without further delay.

She also imposed a punitive additional payment of 10 percent of the benefit as compensation to the beneficiaries for the fund’s delay in completing its investigations.

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