The trustees of two retirement funds face possible action by the Financial Services Board (FSB) after the acting Pension Funds Adjudicator (PFA) recently forwarded two determinations against the funds to the Registrar of Pension Funds for further investigation.
Acting adjudicator Elmarie de la Rey found that the trustees of the Food and Allied Workers Union (Fawu) Provident Fund and the Bosele National Provident Fund were guilty of a “gross dereliction of duties” for failing to pay out two members’ death benefits within a year of their deaths.
She ordered both funds to pay the death benefits of Andries Mafolo and Richard Mogale to their respective dependants.
In the first case, Kelebogile Kgasoane complained to the office of the PFA in June 2008 that she had not received a death benefit payout despite the fact that her partner, Mafolo, had passed away on September 18, 2005. Mafolo was an employee of Dewfresh and a member of the Fawu Provident Fund.
Kgasoane told De la Rey that she had a child with Mafolo in April 2004.
The fund trustees told De la Rey that they asked Kgasoane to submit copies of the child’s birth certificate, her identity document and her banking details.
However, by August 2010 – more than five years later – the death benefit had still not been paid out because the trustees had not resolved the matter.
De la Rey ordered the Fawu Provident Fund to calculate Mafolo’s death benefit and pay it to his dependants within two weeks of her ruling, with interest of 15.5 percent a year from September 2005 to the date of payment.
In the second case, Mosekwa Mokgoto complained to De la Rey’s office in March 2009 that the death benefit of her partner, Mogale, had not been paid out following his death in January 2004.
Mogale was a member of the Bosele National Provident Fund at the time of his death.
The fund’s trustees told De la Rey that, according to their records, a payment “is in progress”.
The trustees said that, as a result of migrating data to the Metropolitan computer system, the fund had suspended contributions and the payment of death claims until May 22, 2009.
However, the benefit had still not been paid by May this year.
De la Rey ordered the Bosele National Provident Fund to calculate Mogale’s death benefit and pay the amount to his dependants within two weeks of the ruling, with interest of 15.5 percent calculated from January 2004 to the date of payment.
In both rulings, De la Rey says the two retirement funds had failed to provide her with convincing reasons for the inordinate delay in paying the death benefits – five years in the first case and seven years in the second case.
EMPLOYER TO PAY UP
Another case before De la Rey recently related to an employer who failed to notify the retirement fund of the employee’s death timeously – with the result that the death benefit was declined.
Mr and Mrs Sekiti complained in December 2007 that their son, Michael Sekiti, had died in June 2004 and they had still not received a death benefit payment from the Amplats Mines Retirement Fund.
The Amplats fund was administered by Old Mutual, and Alexander Forbes provided a consulting service to the fund.
Alexander Forbes told De la Rey that it had received a complaint from the Sekitis in February 2008 and carried out detailed investigations to establish which fund Michael Sekiti belonged to and if a benefit was due.
The company found that although Sekiti had died in June 2004, the Amplats Mines Retirement Fund was only informed of his death in May 2006. Investigation by the fund trustees showed that Sekiti had not completed a nomination form, had never married and had no children.
The fund administrators then confirmed Sekiti’s parents as the likely beneficiaries.
In June 2006, calculations showed a benefit of R7 564 in the pension section and a benefit of R9 754 in the provident section of Sekiti’s retirement fund benefits. In the same month, a death benefit claim form was sent to the insurer, Capital Alliance Group Risk, for consideration.
Capital Alliance Group Risk confirmed that the death notification form from his employer had not been submitted and it declined the claim.
In June 2009, the trustees of the Amplats Mines Retirement Fund paid Sekiti’s retirement fund benefits to his parents. Mr and Mrs Sekiti each received half of the benefits.
De la Rey ruled that the fault in this case lay with the employer, Anglo Platinum Mine.
She ordered the Amplats Mines Retirement Fund to calculate the amount of the death benefit that would have been payable if the fund had been properly notified of Sekiti’s death timeously, together with interest at the rate of 15.5 percent a year, from June 25, 2005 to date of determination.
Anglo Platinum Mine was ordered to pay the Sekitis the amount due within seven days of receiving the calculated amount from the Amplats retirement fund.