A pension fund was this week ordered to pay a death benefit and a spouse’s pension to a fund member’s widow, after a mix-up between the fund’s administrator and its life assurance company resulted in both benefits not being paid out for five years after the member’s death.
Elmarie de la Rey, the Acting Pension Funds Adjudicator, ordered the Vista University Pension Fund to pay the death benefit and spouse’s pension, plus interest of 15 percent a year from 2006 to the date of payment, to AJ Booysen, the widow of fund member DL Booysen, who passed away in July 2006.
DL Booysen was originally employed by the East Rand Campus of the former Vista University. In 2004, the East Rand Campus was incorporated into the Rand Afrikaans University to form the University of Johannesburg (UJ). The employment contracts of East Rand Campus staff were transferred to UJ, and the employees retained their membership of the Vista University Pension Fund.
At the time of the transfer to UJ and until his death, Booysen was receiving a disability pension. Momentum, on behalf of his employer, was paying his contributions to the fund, including the premiums for the death benefit.
The trustees of the Vista University Pension Fund told De la Rey that the fund’s administrator, Sanlam, was then responsible for paying the disability and death benefit premiums for the members of the fund to the fund’s life assurance company, Old Mutual.
Sanlam told De la Rey that neither the fund nor Vista University had informed it that there was a group of disability claimants, including Booysen, for whom contributions were being paid into the fund. Therefore, Sanlam did not pay the death benefit contributions in respect of these members to Old Mutual.
It was only after Booysen passed away in July 2006 that Sanlam became aware of these disability claimants.
Sanlam paid the outstanding risk premiums to Old Mutual following Booysen’s death, but Old Mutual rejected the death benefit claim because Booysen was not in its membership data when he died and the premiums had not been paid timeously.
The adjudicator found that Booysen’s widow was entitled to the lump sum death benefit and a spouse’s pension.
In her ruling, she says the fund is ultimately responsible of maintaining proper records and control systems, even if it delegates some of its functions to a service provider, such as an administrator.
De la Rey says the Vista University Pension Fund failed in its fiduciary duty to exercise rigorous oversight, and this had prejudiced Booysen’s widow.