When retirement fund members die before retirement their dependants are entitled to the member’s death benefits within 12 months of the death of the member, if not sooner.
You cannot be expected to wait for six years for payment, the acting Pension Funds Adjudicator, Elmarie de la Rey, has determined in response to a complaint from a spouse dependant of a member of the National Bargaining Council for the Road Freight Industry Provident Fund.
De la Rey has determined that both the fund and the fund administrator have contravened the Pension Funds Act by keeping the dependant waiting for six years.
She has asked the Registrar of Pension Funds and the Financial Services Board’s head of surveillance and enforcement to investigate and take action against the fund and the retirement fund administrator, RF Administrators.
In the determination handed down recently, De la Rey has ordered the fund to pay the benefit plus interest at a rate of 15.5 percent a year calculated from July 2006 to the dependants of the fund member within 14 days.
RF Administrators claimed in a response to the adjudicator that the payment had not been made because of a problem with its information technology system, which “has resulted in it having to wait for a tax directive from SARS”.
De la Rey says the conduct of both the fund and the administrator “is unacceptable and in breach of the (Pension Funds) Act”.
She says the Act gives retirement fund trustees 12 months to settle death benefit claims. But this does not mean that dependants have to wait 12 months to lapse before making payment.
The trustees have to be satisfied that they have taken all reasonable steps to trace and identify dependants.
De la Rey says neither the fund nor the administrator provided any plausible reason for the inordinate six-year delay, which contravenes the law.
The fund also contravened the law in that it is required to maintain proper control systems and it “failed to act with due care, diligence and good faith in dealing with the deceased’s death benefit...” she says.