Pension fund reverses decision, pays out R798 000 death benefit to beneficiaries

A pension fund has reversed its initial decision and will now pay out a death benefit of R798 066,32 to the beneficiaries of a deceased member, following intervention by the Office of the Pension Funds Adjudicator (OPFA).

This comes after the fund had previously paid only R18 691.26 to the deceased’s estate, citing a lack of contributions during the member’s absence from work due to illness.

The OPFA, a statutory body tasked with resolving pension-related disputes, investigated the matter after receiving a complaint from the deceased’s son.

The complainant stated that his late father had been employed by Steval Engineering and contributed to the Metal Industries Provident Fund. He further explained that his mother, who has since passed away, had informed him that the benefit would be paid to him once he reached adulthood. However, when he approached the fund for payment, he was told that the benefit had already been paid out in 2014.

“The member passed away on September 18, 2013. A death benefit of R18 691.26 was paid to the deceased’s estate late account on August 26, 2014. The quantum of the death benefit is the subject matter,” the OPFA says.

The complainant requested proof of payment, and the fund responded with a letter detailing the amount and the account into which it had been paid. He then contacted the bank, which was unable to verify the account number. Frustrated by the lack of clarity, he asked the fund to confirm that the full benefit had been paid and to provide verifiable proof of payment.

In its response, the fund explained that contributions had been received from the employer for the period April 2012 to July 2013. However, no contributions were made for August and September 2013, as the member was off work due to ill health. The fund noted that the deceased had not claimed any benefit from Sick Pay and had not applied for income from the Permanent Disability Scheme.

The fund argued that the beneficiaries did not qualify for a full death benefit under the Temporary Absence Rules. It cited the Consolidated Provident Fund Collective Agreement for Metal Industries, which states that no deductions or contributions are made during periods of unpaid leave or absence due to sickness, injury on duty, or military service, unless payment is due to the employee under an agreement or law.

According to the fund, the Main Agreement further confirms that contributions are based solely on actual hours worked. Since the deceased did not receive remuneration during his absence, no contributions were made, and therefore, no funds were available to cover the cost of the insured death benefit.

However, following an enquiry by the OPFA on August, 21 2025 regarding proof of payment and the distribution of the benefit in terms of section 37C of the Pension Funds Act, the fund acknowledged that a benefit was indeed due to the beneficiaries. It confirmed that the benefit would be paid in accordance with section 37C.

After re-evaluating the documents and information, the fund’s board resolved to award the full death benefit of R798 066.32 to the beneficiaries. The fund requested supporting documentation from the complainant and other potential beneficiaries to assist in determining their dependency on the deceased.

The Deputy Pension Funds Adjudicator, Naheem Essop, ordered the fund to allocate and pay the death benefit to the deceased’s beneficiaries within two weeks of completing its investigations. This decision marks a significant victory for the complainant and underscores the importance of procedural fairness and accountability in the administration of pension funds, the OPFA says.

PERSONAL FINANCE