Muvhango Lukhaimane | Pension Funds Adjudicator | mail me |
It is sometimes said that the ‘law is an ass’ when one thinks the law is too rigid, unnecessary or ridiculous. The complainant sought payment of a surplus benefit following the death of her husband who was a member of the Auto Workers Provident Fund.
The deceased participated in the fund from October 2004 until his resignation on 5 February 2007. The deceased was paid a withdrawal benefit of R11,167.76 on 9 April 2008.
The importance of an instruction
Following the deceased exit from the fund, a surplus benefit of R596.76 became available and payable to the deceased. However, he did not instruct the fund on how his benefit should be paid.
The complainant said when she enquired about the surplus benefit, she was informed that she must provide the deceased’s tax number which she did not have. SARS indicated that she required letters of executorship in order to obtain the deceased’s tax number.
She proceeded to obtain the letter of executorship. She also requested the surplus benefit amount and was not provided with same. She provided electronic mail correspondence from the fund which indicated that the surplus benefit in respect of the deceased was available.
In its response, the fund stated that as the deceased passed away without providing the fund with an instruction on how his surplus benefit should be paid, the benefit should be paid in terms of section 37C of the Act in line with the Interpretation Ruling 1 of 2020 issued by the Financial Sector Conduct Authority.
The fund provided a benefit statement in response to the complainant’s request for the particulars of the amount payable. The benefit statement was dated 10 June 2021 and reflects that following an actuarial evaluation conducted by the fund, its records reflect that a surplus benefit in the amount of R396.76 is payable to the deceased.
A duty of the board of management
In her determination, Ms Lukhaimane, a Pension Funds Adjudicator, said Section 37C of the Act places a duty on the board of management of the fund to identify the beneficiaries of a deceased member and vests the board or management with discretionary powers on the proportions and manner of distributing the proceeds of a death benefit.
The board of management may not unduly fetter its discretion by following a rigid policy that takes no account of the personal circumstances of each beneficiary and of the prevailing situation.
The evidence indicates that a surplus benefit of R596.76 became payable to the deceased following his exit from the fund. The fund indicated that whilst the benefit was due, the deceased passed away prior to him providing it with an instruction on how the surplus benefit was to be paid. Thus, the benefit must be distributed in terms of section 37C of the Act.
The fund indicated that the deceased’s dependants will be notified about the outcome of its investigation in terms of section 37C of the Act. This case is an indication of what a farce the law can be at times. The FSCA’s interpretation ruling requiring amounts for exits such as these to be dealt with in terms of section 37C of the Act is such a case in point.
Already, the complainant has spent more than R596.76 trying to access this surplus benefit. The fund in turn is going to spend more than R596.76 to determine who is entitled to the benefit in terms of section 37C.
In the meantime, everyone is scratching their heads as to what unnecessarily drives costs within retirement fund administration. This interpretation ruling being administrative action that is not even grounded properly in law.
The fund was ordered to investigate and identify the deceased’s dependants in terms of section 37C of the Act and allocate and pay the surplus benefit to the deceased’s beneficiaries.
