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.
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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:
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:
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