Non-compliance by some municipalities in the Free State in paying employees’ third-party benefits to the applicable funds has left at least two potential beneficiaries devastated.
A daughter and a son have failed in their respective bids to claim the risk benefits of their deceased parents who were employees of the Maluti-a-Phofung Municipality.
They lodged complaints with the Pension Funds Adjudicator (PFA), but the outcomes were not in their favour.
Apparently the deceased workers’ insurance policies lapsed after the Maluti-a-Phofung Municipality had failed to pay benefits to the funds, despite the deduction of third-party benefits being reflected in their wages.
A female employee passed away on 1 January 2018, and another, a male, on 14 September 2018.
Findings revealed that the municipality had failed to pay over third-party benefits of the deceased from the retirement pension fund to the Sanlam Umbrella Pension Fund and from the Maluti-a-Phofung Retirement Provident Fund to the Sanlam Umbrella Provident Fund, despite transfer to the funds having been approved.
“The funds stated that due to the employer’s failure to timeously pay all contributions owed to the funds, the funds followed due processes and terminated the employer’s participation on 27 February 2018, with effect from 1 October 2017,” said Muvhango Lukhaimane of the PFA.
“The fund had removed the benefits from the fund and as far as our office and the fund is concerned, the complainants have no claim.
“Therefore, although the employer confirmed that it is liable for any risk benefits due to members and beneficiaries for the period October 2017 to August 2019, it cannot be held liable for a fund benefit that was no longer provided for in the rules and the special rules applicable to it.
“The beneficiaries should claim directly from the municipality if indeed it undertook to continue providing the benefits outside of the rules.”
She said the funds had submitted that the employer’s special rules were amended with effect from 1 October 2017 to remove all risk benefits.
The deceased workers became members of the funds on 1 September 2012.
According to the adjudicator, the situation of the two complainants would be different if the benefits were still provided for and the Maluti-a-Phofung Municipality just did not pay.
“In this instance, we would get the amount payable from the fund and still order the employer to pay the said amount to the complainants. The complainants would then be able to go as far as attaching the municipality’s property to satisfy the debt,” said Lukhaimane.
To avoid other potential beneficiaries being similarly devastated, she has advised employees to be vigilant about the employer’s compliance.
“They, the employees, must demand that the fund keeps them up to date as to the employer’s compliance with the payment of contributions. When the employer defaults, they must demand that the fund takes immediate action in line with the rules and the law.
“They must be informed about which benefits are underwritten with insurers, because these would immediately fall away when contributions are not paid on time.”
