sparks
ELECTRICAL NEWS
october 2014
18
contractors’ corner
When are benefits payable to the dependants of a deceased member?
ECA News by Mark Mfikoe, national director of the Electrical Contractors’ Association of South Africa
THIS is the first of many columns that I will be writ-
ing for
Sparks Electrical News
and I amgrateful for
the opportunity to assist ECA (SA) members while
adding yet another hat to the many I have worn in
my professional career.
As I am involved with various facets of the
contracting environment, the topics I will cover will
reflect my areas of skill and experience.
One of the hats that I wear is as a trustee on the
Electrical Contracting Industries Pension/Provident
Fund so this month I will take a deeper look at Sec-
tion 37(c) of the Pension Funds Act (PFA) 24 of
1956 with regards to the timing of the payment
of death benefits.
How long after the death of a member are
death benefits payable to the member’s depend-
ants? First, most of the employer/employee
relationships are not only commercial, they are
social, too, so when an employee passes on, the
family relies on the employer for guidance and
the employer wants comfort in the knowledge
that the deceased employee’s dependants will
be looked after. The law and the Pension Fund
Adjudicator’s decisions as well as the writings of
experts in the field can be relied upon to clarify
the aforementioned question.
Let’s look at a typical scenario…
Themba van der Merwe, a 37-year-old employ-
ee of Matwetwe Electrical, suffers a heart attack
and dies. He was single, had no children and his
parents had both died in an accident. He had
nominated his deceased estate as a beneficiary
in the Nomination of Beneficiary Form that ac-
companied the Benefit Statements.
In this scenario, a claim for his Death Benefits
is submitted by the executor of his estate to the
trustees for a decision and distribution. No one
else makes any claims.
In considering this claim, the trustees are
guided by the provisions of Section 37(c) of the
PFA 24 of 1956, which requires the trustees to:
(a) Identify and trace dependants and those
persons who would have been nominated by the
deceasedmember;
(b) Make benefit payments on a fair and
equitable manner; and
(c) Determine an appropriate mode for
the payment of the benefit.
The trustees have 12 months to complete
this process and the practise amongst trus-
tees is to passively wait the full 12 months
in cases where the submissionmade is that
the deceased had no children and was sin-
gle before payment is processed. The aim is
to give potential dependants an oppor-
tunity to submit their claims and to avoid
‘early’payment in case someone“jumps out
of the woodwork!”
For a long time, inmy capacity as a board
member charged with this responsibility,
I accepted that this was a reasonable and
careful stance to take.
According to Lize de la Harpe, a l
egal
advisor at Glacier by Sanlam
– and
I agree with her –
“it is a commonmiscon-
ception that the fund’s duty to pay is always
contingent on the expiry of the 12month
period.”
She submits that the duty to pay is
dependent on whether the board is satis-
fied that it has investigated and considered
the matter with due diligence and is in a
position tomake an equitable allocation.
This interpretation is strengthened by the
Pension Fund’s adjudicator in
Dobie NO vs
National Technikon Retirement Pension Fund
[1999] 9 BPLR 29 (PFA)
. The adjudicator had
to determine whether it was the require-
ment of the Act that the full 12 month
period should expire before the distribu-
tion of the proceeds of a death claim – that
is whether it is obligatory to wait for a
maximumperiod of 12 months in case any
claimants came forward.
The adjudicator held that Section 37(c)
“does not make such a course of conduct
obligatory. The phrase, ‘within 12months of
the death of themember’ in the Act does not
qualify the obligation to pay the benefit. It de-
fines the period available for tracing depend-
ants beforemaking payment exclusively to
a nominee. Hence, if the board is reasonably
satisfied that it has traced all dependants,
the stipulated period (of 12months) does
not pose any limitation upon the distribution
of the dependants. The provision does not
prohibit distribution of the proceeds within 12
months. Nor does it compel the distribution at
the expiry of the 12month period”.
The payment of proceeds in question de-
pends on whether the benefit is‘ripe’to be
paid. This would be the case if a satisfactory
tracing and identification of dependants
tomake benefit allocations on a fair and
equitable basis is possible. Such payments
can be made irrespective of the time
elapsed within the 12 months deadline.
It is therefore important that the employ-
ees’beneficiaries are made aware of the
requirements of the Law and their rights in
relation to the payment of benefits.
Over and above disclosing their benefi-
ciaries for easy distribution of their benefits,
it is important that their expectations as to
the timing of such benefits be in line with
the legal requirements and administration
of justice.
Do not accept that trustees should
delay the payment of benefits due, simply
because they are waiting for time to pass.
It is not correct – Our Law and the Pension
Funds Adjudicator have told us as much.
Take care and looking forward to your feed-
back and a fresh topic in the next issue.
