Martin Hesse. File Image: IOL
Several recent determinations by the Pension Funds Adjudicator, Muvhango Lukhaimane, attest to the work her office is doing in resolving disputes, ensuring that people’s retirement savings are protected, and that, in the event of an employee dying in service, death benefits are distributed equitably.

Death benefit payout

The board of a pension fund “should have exercised better discretion” when allocating a death benefit of more than R1million to a dead man’s 75-year-old mother, to the exclusion of his former life partner, a nominated beneficiary.

Lukhaimane’s office received a complaint from JT Damoense, the life partner of the late LB Mantjiu, who had been a member of the Absa Pension Fund, administered by Absa Consultants and Actuaries.

Following Mantjiu’s death in a car accident on March 4, 2017, a benefit of R1065480 became available for distribution. The board allocated the entire amount to Mantjiu’s mother.

Damoense submitted that she was a nominee on Mantjiu’s beneficiary nomination form and, as such, she should have been considered by the fund. She said the fund had failed to consider the fact that Ms Mantjiu was 75 years of age and received a state old-age grant. It had failed to consider her own circumstances and the fact that she was a nominee entitled to half of the benefit.

In response, Absa Consultants and Actuaries submitted that, during its investigation, it had established that Mantjiu’s mother, who had been nominated to receive the other half of the benefit, was financially dependent on him.

It stated that Mantjiu was involved in a life partnership with Damoense when he signed the beneficiary nomination form in March 2010. However, the relationship between Mantjiu and Damoense was non-existent at the time of his death.

Since their break-up, Mantjiu had contributed to the maintenance of their son, who also died in the car accident. Thus, the extent of Damoense’s financial dependency on Mantjiu was their son’s maintenance. The investigation revealed that Damoense was gainfully employed and earned R21000 a month, was 37 years of age and fully able to generate income through her employment.

It submitted that even though Damoense was a nominee, the board had identified her as not being financially dependent on the deceased. There was no longer a need to maintain their son, because he had also died.

In her determination, Lukhaimane said that where there are dependants and nominees, the Pension Funds Act provided for pension fund boards to make an equitable distribution. She said a critical point in this case was that, on the beneficiary nomination form, Mantjiu had assigned half of the death benefit to Damoense and the other half to his mother. However, the board had failed to follow Mantjiu’s wishes.

“The complainant did not have to prove that she was financially dependent on the deceased for her to be considered. The mere status of being a nominee compelled the fund to consider her situation, together with [all] other relevant factors.”

She set aside the decision of the board and ordered it to re-exercise its discretion in terms of section 37C of the Pension Funds Act, considering the issues raised in the determination.

Municipalities not paying over contributions

It’s not only certain rogue private-sector employers that try to “steal” their employees pension fund deductions by not paying them over to pension funds - some municipalities are doing it too.

Lukhaimane said non-compliance by municipalities regarding the payment of contributions affected members in terms of their pension or provident fund investments and risk benefits. Funds cannot pay out benefits if contributions are in arrears.

She was commenting in a determination concerning Maluti-A-Phofung Local Municipality, which had failed to pay the contributions of the complainant, TP Hlongwane, to the Phuthaditjhaba Municipality Pension Fund and the National Fund for Municipal Workers.

In submissions from the respondents, including administrator ACA Employee Benefits, it emerged that the municipality had been heavily in arrears in paying over the pension fund contributions of its employees and that a case against it had been opened with the police by the Phuthaditjhaba Municipality Pension Fund. The matter had also been reported to the Financial Sector Conduct Authority.

In March last year, an agreement was reached whereby the municipality undertook to pay the arrear contributions of members who had been dismissed, or had resigned or died by June 2018, and the balance would be rectified thereafter. But while the municipality had eventually paid the arrear contributions, the interest on these payments was still outstanding.

In her determination, Lukhaimane acknowledged that the pension funds and administrator had made attempts to get the municipality to pay up.

The municipality was ordered to pay the outstanding interest on the arrear payments so that Hlongwane’s contributions were up to date.

Beneficiary nominations

Pension fund members who have legal dependants must include allocations to such dependants on the beneficiary nomination form, and cannot entrust their welfare to family members who are often “less than honorable where money is concerned”, Lukhaimane says.

She was commenting in the wake of a determination involving a complaint by LR Roems against the Metal Industries Provident Fund and Metal Industries Benefit Funds Administrators concerning the delay in the payment of a benefit following the death of her brother, C Roems.

Lukhaimane found that the complainant had been “dishonourable” and had deliberately failed to disclose important information.

On C Roems’s death, a benefit of R892829 became payable. The board of the pension fund resolved to allocate 40% to the complainant based on her nomination as a nominee and retained the remaining 60% (R536697) to a son of the deceased who had not appeared on the nomination form.

When, in 2017, the administrator had contacted LR Roems to obtain information about her dead brother’s dependants and a child mentioned in her affidavit, she said that she had no idea of the whereabouts of the child, did not know his name and had never met him.

However, a nephew of C Roems subsequently confirmed that the child’s name was Christopher and the complainant was aware of him. He confirmed that Christopher would visit his father and, after his father’s death, he enquired about his father’s benefits and belongings, which the complainant was aware of.

In her determination, Ms Lukhaimane said it was the board’s responsibility when dealing with death benefits to conduct a thorough investigation to determine the beneficiaries, to decide on an equitable distribution.

The board was not bound to allocate the entire benefit to the complainant based on her nomination as the sole beneficiary. It had to take into account other beneficiaries and the extent of their dependency on the deceased.

“It follows that the board exercised its discretion equitably in allocating 60% of the death benefit to [the child],” she said, ordering the fund to pay the son the portion of the benefit as allocated.

PERSONAL FINANCE