Pension fund faces FSCA investigation following death benefit dispute

The Pension Funds Adjudicator has referred a pension fund to the Financial Services Conduct Authority (FSCA) for investigation and penalty after the fund had repeatedly failed to respond to the Office of the Pension Funds Adjudicator for information pertaining to a complaint.

Deputy Pension Funds Adjudicator Naheem Essop, in his determination, directed the FSCA to investigate the conduct of the Paper, Printing, Wood and Allied Workers' Union (PPWAWU).

Essop noted that the fund is administered by Fairsure Administration (Pty) Ltd, and that his office has consistently struggled to obtain responses from funds under Fairsure’s administration. This concern, he says, has already been escalated to the FSCA.

The matter before Essop involved the non-payment of a death benefit to a widow whose spouse, employed by Afripack (Pty) Ltd, passed away on August 6, 2023.

According to the complainant, she submitted all required documents to the fund to access the death benefit. She alleged that a trustee of the fund, Zuma, contacted her and arranged to meet in town rather than at the fund’s offices. At this meeting, he handed her a letter indicating that the deceased had a benefit of R6 000.56.

The complainant raised suspicions about the circumstances, noting that the letter was not addressed to her and questioning whether the stated benefit amount was accurate, given that her spouse had been employed since 1981.

She provided supporting documentation, including a letter from the employer confirming employment from February 19, 1981, and a letter from the Master of the High Court dated January 24, 2024. The latter stated that it could not issue letters of authority or executorship without disclosure of the outstanding balance.

Despite being given multiple opportunities, the employer, the fund, its chairperson, and its principal officer failed to respond to the Adjudicator’s requests for comment on the allegations.

Essop found that the fund had not paid the deceased’s potential beneficiaries and had failed to conduct a proper investigation. He emphasised that the delay since the deceased’s passing was “excessively long” and ordered that the fund finalise its investigation and proceed with payment without further delay.

“The fund's failure to provide a formal response is concerning. Furthermore, it prejudices the complainant in that the Adjudicator is not in a position to make a decision whether the fund received all contributions in respect of the deceased and whether the fund has conducted a proper investigation as required in terms of section 37C of the Act.

“What is even more concerning is that there are serious allegations made against a trustee of the fund, which have gone unanswered.

“It is on this basis that this matter is referred to the FSCA to investigate the conduct of the fund as it affects not only this employer and the complainant but others as well,” Essop says.

Essop ordered the fund to finalise its investigation in terms of section 37C of the Act by January 31,  2026, and to allocate and pay the deceased’s death benefit to the identified beneficiaries on or before February 20, 2026.

PERSONAL FINANCE