Latest news with #PensionFundsAdjudicator
IOL News
6 days ago
- Business
- IOL News
Controversial death benefit allocation overturned by Pension Funds Adjudicator
The Pension Fund Adjudicator ordered a pension fund to go back to the drawing board as a woman, who claimed to be a dependant of the deceased, said she was short-changed. Image: File The decision to allocate a large portion of a death benefit to the financially independent son of the deceased, while his unemployed life partner and her children only received a fraction of the benefit, was set aside by the Pension Funds Adjudicator. The adjudicator, Muvhango Lukhaimane, recently ordered the pension fund to consider the financial dependency of the complainant (the life partner) and her children. The complainant claimed she was the life partner of the deceased, who was a member of the Private Security Sector Provident Fund. Following the deceased's passing, a death benefit of R254,609.51 became payable to his beneficiaries. The fund allocated 10% to his unemployed partner, 23% to the deceased's son, who is employed, 25% to his daughter, who is a scholar, 14% to a stepson who is a scholar, 14% to a toddler stepdaughter, and 14% to a toddler stepson. The complainant objected to the fund's allocation of the death benefit. She claimed the deceased had made her 100% beneficiary of his pension fund benefit and submitted that she had documents to prove this. She said she receives R2,800 monthly from the beneficiary fund as per the allocation by the board. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading According to her, the deceased contributed to raising and supporting her four children, whose support is now unavailable. This, she stated, puts her under severe financial pressure. The amount of R2,800 per month only covers school fees. The fund stated that at the time of death, the deceased was staying with the complainant and all her children. He was providing for them as if the children were his own. In her determination, Lukhaimane said the fact that a person qualifies as a legal or factual dependant does not automatically give them the right to receive a portion of a death benefit. The deciding factor is financial dependency. She said the submissions showed that at the time of death, the deceased was staying with the complainant and her children. There was no dispute that he was providing for them as his own, and consequently, they qualified for the allocation of the death benefit. Lukhaimane said there was no dispute that the complainant was the deceased's life partner at the time of his death. Thus, she qualified as a factual dependant. However, she stated that financial dependency must still be established. This is because the complainant was no longer married to the deceased at the time of his death, as they divorced and never remarried. The complainant was married to somebody else at the time of the deceased's passing, and they had three children together. They then separated. The complainant moved back with all her children to stay with the deceased. Lukhaimane said it is the board's responsibility when dealing with the payment of death benefits to conduct a thorough investigation to determine the beneficiaries, and thereafter, decide on an equitable distribution. 'In the present matter, the marital circumstances of the complainant were not clear,' she said. The allocation of the death benefit was set aside, and the fund was ordered to consider the financial circumstances and extent of dependency of the complainant and the children on the deceased.
IOL News
10-08-2025
- Business
- IOL News
Constitutional Court rules on pension fund death benefits distribution
The Constitutional Court took a closer look at who is a dependent of a pension fund when the holder of the fund dies. Image: File In a groundbreaking judgment regarding the distribution of death benefits, the Constitutional Court on Friday held that dependency must be assessed based on facts at the date of a member to a pension fund's death, not at the time distribution decisions are made. Every year, South African retirement funds distribute billions of rands upon the death of their in-service members to persons who were 'dependents' of a deceased member. These benefits are distributed in terms of section 37C of the Pension Funds Act. This application related to the equitable allocation and distribution of death benefits held within a pension fund. The Constitutional Court noted that it is particularly important in the context of South Africa's high incidence of employment precariousness and dependency on a single breadwinner. Pension fund benefits provide much-needed assistance to those left vulnerable in the event of the death of their primary supporter. In this case, Tshifhiwa Mutsila's husband died in 2012 of work-related injuries. She was left to care for herself and their five children. She filed a claim with her pension fund, the Municipal Gratuity Fund, claiming the death benefit of R1.6 million. However, she discovered there was a competing claim from another woman, Dipuo Masete, who said she was the customary wife of the deceased and that they had two children. The fund recognised both the applicant and Masete and their respective children as dependents of the deceased. The fund allocated 47.5% of the benefits to Mutsila and 52.5% to Masete and her children. A complaint was lodged with the Pension Funds Adjudicator who found that the fund had not conducted a proper investigation as required by the Act to identify the beneficiaries of the deceased and set aside its decision regarding the allocation of the death benefit. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ The fund meanwhile launched an application in the high court, which found that the fund had failed to conduct a diligent investigation and dismissed the application. The fund's subsequent appeal to the full court was dismissed on similar grounds. The fund appealed that decision to the Supreme Court of Appeal, which set aside the adjudicator's decision and upheld the decision taken by the fund. It held that both the high court and the full court failed to recognise whether Masete and her two children were factually dependent on the deceased. In a unanimous judgment penned by Judge Leonora Theron, the ConCourt held that a proper investigation to determine the dependency of Masete and her children was not carried out by the fund. The extent of factual dependency is crucial when a fund makes an equitable allocation and distribution, it said. The apex court held that the date of death is to be used to determine dependency. It, however, said that this did not mean that changed circumstances cannot be taken into account when the equitable allocation is made. If, at the distribution stage, there are changed circumstances that alter the needs of the dependent, the fund may have regard to these circumstances when determining an equitable distribution. The court held that it was necessary to remit the matter to the fund and directed it to conduct its investigation afresh and to consider who the dependents of the deceased were at the time of his death. This investigation must be concluded within three months.
The Citizen
13-06-2025
- Business
- The Citizen
Adjudicator reports Local Authorities Pension Fund for misconduct
The Pension Funds Adjudicator is holding the pension fund for local authorities accountable for not paying over pension contributions. The Pension Funds Adjudicator has severely criticised the South African Local Authorities Pension Fund for failing to respond to repeated requests for information and has reported the fund's misconduct to the Financial Services Conduct Authority (FSCA). Muvhango Lukhaimane, the Pension Funds Adjudicator, says her office has received several complaints against the fund, and she believes the fund's lack of response reflects a disregard for the Pension Funds Act, its rules, and the best interests of its members. She has reported the fund to FSCA to act against its officials. ALSO READ: What happens to your pension fund when you pass away? Complaint to Pension Fund Adjudicator about withdrawal benefit One of the complaints she received was from someone employed by the South African Police Service, who was unhappy with the amount received as his withdrawal benefit when he stopped working. He requested that the Office of the Adjudicator investigate whether the employer had failed to make all required contributions to the fund on his behalf, as this would affect the amount he could withdraw. When the office of the Adjudicator contacted the fund for a response to the complaint, the fund failed to file a response, forcing the Adjudicator to proceed with determining the matter. Lukhaimane said in her determination that the fund's non-compliance is 'intolerable' as it points to several contraventions of the Pension Funds Act and also reflects poor conduct of duty. 'The fund's unreasonable delay in responding to the complaint could not be entertained as it prejudiced the complainant. My office deals with high volumes of complaints, which need to be disposed of expeditiously to properly fulfil its mandate. 'Therefore, it is mandatory for pension funds and administrators to ensure that they respond properly and adequately to enquiries from my office, especially since boards of funds and principal officers are required to be fit and proper.' ALSO READ: Councils take pension billions Failure to respond is failure to uphold fiduciary responsibilities Lukhaimane says the fund's failure to respond to enquiries and respond timeously to complaints is a failure to uphold the officials' fiduciary responsibilities. 'It inhibits my office's ability to deliver on its mandate and, if it is allowed to continue, will render the Adjudicator's office ineffective. 'It also constitutes a barrier to complainants' being able to have their complaints properly resolved,' said Lukhaimane. She said that when the administrative wheels of a fund come off, it starts with the fund's failure to respond to complaints that require data from its administration system relating to payment of contributions. 'The administrator in this instance is Fairsure Administration (Pty) Ltd, and all indications are that there is an issue with the receipt and allocation of contributions. It is therefore imperative that the FSCA acts with haste to avoid further prejudice to members.' ALSO READ: Two-pot retirement system: Nothing for thousands of pension fund members Pension Funds Adjudicator's acts on non-compliance Lukhaimane ordered the fund in her determination to reconcile the contributions received and advise the employer of any outstanding contributions. In addition, the fund was ordered to provide the complainant with a breakdown of his contributions and a breakdown of his withdrawal benefit. She also ordered his employer to pay any arrears to the fund. The fund was ordered to pay the complainant any outstanding fund credit due to the arrears for contributions. The Office of the Pension Funds Adjudicator (OPFA) is a statutory body established to resolve disputes in a procedurally fair, economical and expeditious manner. The adjudicator's office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty regarding pension funds. If you have a question or a complaint, visit the Adjudicators website at call it on 012 346 1738 or email Enquiries@ NOW READ: Pension Fund complaints surge amid trust and accountability concerns
IOL News
11-05-2025
- Business
- IOL News
Pension funds must comply with PFA information requests, says Muvhango Lukhaimane
The Pension Funds Adjudicator, Muvhango Lukhaimane, asserts that pension funds must provide requested information without beneficiary consent, clarifying the PFA's authority under the Protection of Personal Information Act. A pension fund is obliged to provide the Pension Funds Adjudicator (PFA) with requested information without obtaining consent from beneficiaries, says Muvhango Lukhaimane, the PFA. According to Lukhaimane, funds cannot use the Protection of Personal Information Act (POPIA) as an excuse to withhold information from the PFA. She says that as a public body, as defined in the Act, the PFA has the right to access personal information when performing its duties. This came to light in a recent determination, where Lukhaimane made it clear that the PFA falls within the definition of a tribunal under POPIA and is permitted to collect personal information when necessary for its investigations. The issue arose when a fund initially refused to provide its investigation report to the PFA, citing the need to protect beneficiaries' personal details. Only after being reminded that POPIA allows the PFA to process personal information in the exercise of its powers and duties, did the fund comply with the request. Lukhaimane clarified that, in matters involving death benefits, the PFA's role is to assess whether the board acted rationally, reasonably, and within the law. 'Therefore, a fund cannot hide behind POPIA and bears the onus of demonstrating that it has conducted a proper investigation per section 37C,' she says. The Financial Services Tribunal further reinforced this point, stating that the PFA should insist on investigation reports to confirm that funds have provided sufficient information to justify their allocations. A recent complaint brought before the PFA highlighted the consequences of inadequate investigations. The case involved the Eskom Pension and Provident Fund, which was tasked with allocating a lump sum death benefit of R560,160 following the passing of a pension fund member. The board distributed the benefit among the deceased's customary spouse, life partner, and children, but Lukhaimane was not satisfied that a thorough investigation had been conducted to justify the final distribution. She ruled that the fund had a duty to actively investigate the extent of each beneficiary's financial dependency on the deceased to ensure an equitable allocation. The deceased had nominated his customary spouse to receive 80% of the benefit, with 10% allocated to his life partner and the remainder to two of his children. However, the actual allocation deviated significantly from his wishes: 28% was allocated to his customary spouse 28% to his life partner Two percent each to five major children 30% to a minor child Two percent each to two other minor children The fund justified its decision by arguing that the life partner qualified as the deceased's factual dependant, given that she was 50 years old, unemployed, and had no immediate income prospects. However, Lukhaimane found that the board had failed to give sufficient weight to the beneficiary nomination form, which must be a substantial factor in any decision on death benefits. Lukhaimane stressed that the law recognises three categories of dependants: Legal dependants – Those for whom the deceased had a legal duty of support, such as spouses and children. Factual dependants – Individuals who relied on the deceased for financial support, but for whom there was no legal obligation. Future dependants – Those who could have become financially reliant on the deceased over time. While qualifying as a legal or factual dependant does not automatically entitle someone to a portion of the benefit, the determining factor remains financial dependency. Lukhaimane says dependants must not be left destitute by the death of the deceased, which places an obligation on the funds to actively investigate the financial circumstances of each beneficiary. 'There must be a good reason for a fund not to give effect to a nomination, to justify its decision to deviate from the wishes of the deceased,' she ruled. She also criticised the Eskom Pension and Provident Fund for failing to gather adequate proof of dependency, stating: 'The fund indicated that the complainant and the deceased's major children failed to provide proof of the extent of their financial dependency on the deceased. However, there is a duty on the fund to actively investigate this before making an allocation.' In this case, the board's decision was set aside, reinforcing the importance of transparent and fair decision-making in pension funds. Ultimately, she says pension funds have a duty to ensure that dependants receive what they are entitled to, not through assumption or incomplete investigations, but through rigorous and well-documented financial assessments. PERSONAL FINANCE
IOL News
06-05-2025
- Business
- IOL News
Understanding the exemption of legacy policies in the new pension system
Any policy in respect of a retirement annuity plan entered into before 1 September 2024 - is exempted from the two-component benefit system. Members of pension funds must understand the implications of the new two-component retirement system and how legacy policies are exempted from it, following a recent ruling by the Pension Funds Adjudicator. Any policy in respect of a retirement annuity plan entered into before 1 September 2024 - is exempted from the two-component benefit system. The two-component pension system, implemented on 1 September 2024, splits retirement fund contributions into a "Savings Component" and a "Retirement Component". One-third of contributions goes to the Savings Component, which allows members to withdraw funds before retirement, while the remaining two-thirds go to the Retirement Component, which must be used to purchase a retirement income product. Muvhango Lukhaimane, the Pension Funds Adjudicator, recently ruled on a complaint received from a fund member, who was aggrieved that the South African Retirement Annuity Fund denied him his right to withdraw from his savings component. The complainant's policy commenced on February 1, 1998, with a contractual retirement option date of February 1, 2028. The complainant had a fund credit of R63 134.74 on June 15, 2024. The fund submitted the Income Tax Act (ITA) provides for the exclusion of legacy policies, defined as pre-universal life and universal life policies. It indicated that the complainant's policy fell under this category and was, therefore, excluded from the new two-component retirement system. In compliance with the rules of the Financial Services Conduct Authority, the fund amended its rules to provide that the relevant elements of the two-component system would not apply to legacy retirement annuity policies. The fund submitted that the complainant had an option to transfer his current policy to a two-component compliant retirement annuity to benefit from the new system. The deadline for this transfer was August 1, 2024, and the fund did not receive a transfer request within this period. The fund indicated that the complainant may transfer this contract to a compliant retirement annuity. However, he would need to reinstate the premiums to start accumulating value in the savings component going forward to exercise a savings withdrawal in terms of the two-component retirement system. In her determination, Lukhaimane said it was clear from the fund's submissions that the complainant's policy was exempted from the two-component retirement system in terms of section 1 of the ITA and the fund rules. She said she was satisfied the fund acted lawfully in terms of its rules, the ITA and the policy contract in refusing to pay the complainant the withdrawal he requests. The complaint was dismissed. The Office of the Pension Funds Adjudicator is a statutory body established to resolve disputes in a procedurally fair, economical, and expeditious manner. The adjudicator's office investigates and determines complaints of abuse of power, maladministration, disputes of fact or law and employer dereliction of duty in respect of pension funds. THE POST
