Anglo American Property Services Provident Fund FINAL DETERMINATION IN TERMS OF SECTION 30M OF THE PENSION FUNDS ACT OF 1956

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IN THE TRIBUNAL OF THE PENSION FUNDS ADJUDICATOR In the complaint between: CASE NO: PFA/KZN/328/99/NJ Moses Mlungisi Complainant and Anglo American Property Services Provident Fund Ms B Lindiwe Ms T Makhosazane Ms H Thobile Ms F Xolisile Ms Lungile First Respondent Second Respondent Third Respondent Fourth Respondent Fifth Respondent Sixth Respondent FINAL DETERMINATION IN TERMS OF SECTION 30M OF THE PENSION FUNDS ACT OF 1956 1. On 9 October 2000 I handed down a preliminary determination and issued a rule nisi calling upon the parties to show cause why the following order should not be granted: The respondent provident fund is directed to pay the complainant R8,422.64 together with interest thereon compounded at the rate prescribed in the Prescribed Rate of Interest Act for a judgement debt from 16 September 1996 to the date of payment, within 6 weeks of the date of this ruling. 2. In addition, Ms B Lindiwe, Ms T Makhosazane, Ms H Thobile, Ms F Xolisile and Ms Lungile were joined as the second to sixth respondents respectively to the complaint. The respondent fund was directed to serve a copy of the complaint, its response and the preliminary ruling upon the second to sixth respondents. It has duly done so.

Page 2 3. The factual background to this matter is fully set out in the preliminary determination (paragraph 5 9). It is unnecessary to again repeat them in any detail. Suffice to say that a death benefit of R96,871.66 payable by the fund became available for distribution amongst the complainant and the second to sixth respondents. The trustees of the provident fund decided to award the complainant R19,374.33 to be held in a trust until he attained 21 years of age. However, the broker of the fund, who arranged for the establishment of the trust in error ensured that the complainant s trust only received R10,951.69. Therefore, I issued a rule nisi calling upon the fund to show cause why the outstanding balance (R8,422.64) together with interest thereon should not be paid to the complainant directly (as he had now attained the age of majority). 4. The second to sixth respondents have submitted no further submissions. However, the fund obtained the services of Mr Reaan Swanepoel of Rooth & Wessels Inc attorneys, who made the following written submissions: It is clear that the applicant (complainant) did not receive his full portion of the awarded benefit. It should however be remembered that a R3,000.00 advance towards funeral costs was made and deducted from the distributable amount thus the final amount for distribution only amounted to R93,871.66. The applicant s share amounts to R18,774.33 of which he had already received R10,951.69. The shortfall amounts to R7,822.64. 5. Therefore Mr Swanepoel conceded that R7,822.64 is due to the complainant. However, this amount is different to the amount contained in the rule nisi, as the fund requested the R3,000.00 advanced towards funeral costs to be deducted from the amount available for distribution.

Page 3 6. The distribution of the death benefit was regulated by section 37C(1), the material provisions of which reads: Notwithstanding anything to the contrary contained in any law or in the rules of a registered fund, any benefit payable by such a fund upon the death of a member, shall, subject to a pledge in accordance with section 19(5)(b)(i) and subject to the provisions of section 37A (3) and 37D, not form part of the assets in the estate of such a member, but shall be dealt with in the following manner: (a) If the fund within twelve months of the death of the member becomes aware of or traces a dependant or dependants of the member, the benefit shall be paid to such dependant or, as may be deemed equitable by the board, to one of such dependants or in proportions to some of or all such dependants 7. In terms of section 37C, the payment of death benefit is governed by the scheme set out in the section, regardless of the rules of the fund or any claim based on the other laws or legal principles. The subsection is mandatory and excludes the members freedom of testation with regard to his death benefit when he is succeeded by dependants. However, the subsection is subject to a pledge in accordance with section 19(5)(b)(i), section 37A(3) and section 37D. It is more than evident that the provisions of section 19(5)(b)(i) and section 37A(3) are not applicable in this matter. 8. Section 37D, in turn, only allows eight kinds of deductions. These are: 8.1. Amounts due to the fund in respect of housing loans granted to the member by the fund (section 37D(a)(i)). 8.2. Amounts due to the fund in respect of amounts for which the fund is liable under a guarantee furnished in respect of a housing loan to the member made usually by a bank or a building society (section 37D(a)(ii)).

Page 4 8.3. Amounts due by a member to his employer owing on the date of his retirement or exit from the fund in respect of a housing loan granted by the employer to the member (section 37D(b)(i)(aa)). 8.4. Amounts due by the member to his employer on the date of his retirement or exit from the fund in respect of amounts for which the employer is liable under a guarantee in respect of a housing loan made by some other person, usually a bank of building society (section 37D(b)(i)(bb)). 8.5. Amounts due by a member to his employer on the date of his termination of membership in respect of compensation in respect of any damage caused to the employer by reason of any theft, dishonesty fraud or misconduct by the member (section 37D(b)(ii)). 8.6. Amounts which the fund has paid or will pay by arrangement, and on behalf of, a member or beneficiary in respect of subscriptions to a medical aid scheme (section 37D(c)(i)). 8.7. Amounts which the fund had paid or will pay by arrangement, or on behalf of, a member or beneficiary in respect of insurance premiums (section 37D(c)(ii)). 8.8. Amounts which the fund has paid or will pay by arrangement, or on behalf of a member or beneficiary in respect of any purpose approved by the Registrar on the conditions determined by the Registrar upon a request in writing from the fund (section 37D(c)(iii)). 9. From the above it is also evident that a deduction for funeral costs does not fall within the above allowable deductions. Therefore, the fund may not deduct funeral costs from the death benefit. Accordingly, I am satisfied that the complainant is entitled to

Page 5 20% of the death benefit, in terms of which he is entitled to R8,422.64 (R19,374.33 less R10,951.69 (amount paid)) together with interest thereon. 10. Therefore, the final order of this tribunal is as follows: The respondent provident fund is directed to pay the complainant R8,422.64 together with interest thereon compounded at a rate prescribed in the Prescribed Rate of Interest Act for a judgement debt from 16 September 1996 to the date of payment, within two weeks of the date of this ruling. Dated at CAPE TOWN this 23 rd day of November 2000. John Murphy Pension Funds Adjudicator