Over three decades of consulting with pension funds, the author has encountered numerous grieving families who have repeatedly stated the same phrase: 'We assumed the fund would simply pay out the funds.'
However, this rarely happens smoothly, and statistics from the Office of Pension Funds Administration (OPFA) increasingly demonstrate the danger of such an assumption. The author emphasizes that this is not a criticism of the entire pension fund industry; most trustees, administrators, and insurers perform their duties properly most of the time.
Nevertheless, for a family in an unfavorable statistical situation, the phrase 'most of the time' offers no comfort. The author's practice deals daily with families who wait months for death benefits for reasons beyond their control, pursue an insurer who quietly violated its own deadlines, or try to understand a benefit statement written in complex legal language. It is precisely because the system works well most of the time that members of the fund become less vigilant, and this is when gaps appear.
Examples of documentation-related errors
Several recent decisions involving OPFA and the Tribunal for Financial Services illustrate various ways these problems arise, none of which are due to negligence on the part of the fund member.
The most telling recent case concerned the BECSA Provident Fund. Pension Judge Lebogan Mogashoa ordered the suspension of a R2.07 million death benefit payment after a woman who presented herself as the deceased's partner admitted during questioning that she had never met him. She was convinced by a friend to submit a false claim for a share of the funds.
The fund accepted her affidavit, supported by a second affidavit from the 'landlord and friend,' without independently verifying either. Mogashoa found that the board of directors failed in its legal duty under Section 37C of the Pension Funds Act to properly investigate the relationship, and ruled to conduct a new distribution based on evidence.
It is also worth noting that the same fund underpaid the deceased's actual family by more than R325,000, and this shortfall was only corrected after repeated pressure from the family and direct appeal to SARS.
When the fund makes calculation errors, not the beneficiary
Not all cases involve fraud. In a ruling by Deputy Pension Judge Nahim Essop, the ZF of South Africa Pension and Group Life Assurance Fund was ordered to recalculate a pensioner's benefit because the fund applied a capitalization method not sanctioned by its own rules, which resulted in a reduction of the benefit that should have been over R1.3 million per year. The pensioner had worked for the employer since 1995.
Essop's conclusion was based on the principle that every fund member must understand: the fund's accounting convenience does not override the literal interpretation of its own registered rules. Members are entitled to what the rules promise, not what is administratively easiest to pay.
Good investigation, disputed result—but justified
In contrast to the BECSA case, consider a recent decision concerning the Corporate Selection Umbrella Retirement Fund, where a sister challenged the fund's decision to allocate 45% of an R8.3 million death benefit to her late brother's long-term partner. The judge upheld the fund's allocation—not because it favored the partner, but because the fund had actually verified the cohabitation claim with evidence before making the decision.
The lesson here is the opposite: proper procedure protects the fund's decision, even if the family disagrees with it.
Even justified findings against the fund may require a second round
The Ninety-One Retirement Annuity Fund case shows how iterative this process can be. The fund initially provided the full benefit of R2.64 million to the deceased's partner, who had lived with him for nearly two decades. However, the judge overturned this decision following a complaint from the deceased's sister, who claimed she was also financially dependent and that she had not been properly investigated. After a review, the fund conducted a new investigation and split the benefit in a 60/40 ratio. Achieving a fair outcome required two rounds and about eighteen months—time that a grieving family should not have to spend fighting a process that should have been correct from the start.
Disputes caused by the two 'pot' system
Since the introduction of the two 'pot' pension system, there has been a growing number of complaints regarding the incorrect application of withdrawal rules by funds. In one recent case, Essop ordered the Municipal Employees Pension Fund to grant a member access to a savings withdrawal benefit after discovering that the fund had incorrectly applied its own rules.
This is a reminder that even well-established funds are still adapting to a relatively new system, and members withdrawing funds under the two 'pot' system should not assume that the first response received through the call center is correct.
Commonalities of these cases
None of these members made any mistakes. They contributed diligently, sometimes for decades. The problem lay entirely on the other side of the table: an affidavit taken at face value, an incorrectly applied rule, a missed investigation, or a misunderstanding of the new system.
The common issue is the assumption—by the fund, not the fund member—that the easier path is the right path.
This is why the existence of OPFA is as important as its mere presence. It is a free channel that does not require legal representation, which has repeatedly corrected real financial injustice for ordinary families who otherwise would not have the means to challenge a fund's decision. Members must know about its existence before they need it, not discover it in a crisis.
The legal procedure is to lodge a written complaint with the fund, and then escalate to OPFA after 30 days if the issue is not resolved. This is a right that every contributing member already possesses.
For members and their families, the practical answer to all this is not paranoia, but diligence: request an annual benefit statement and challenge it if it does not arrive; keep the beneficiary designation form up to date; generally understand how your benefit is calculated; and if the payment seems delayed, underestimated, or incorrectly distributed, state your concern in writing and escalate it.
For trustees and administrators, the answer is equally clear: an affidavit is a starting point for investigation, not a substitute for it, and the fund's own rules, not administrative convenience, are the final verdict on what the member is entitled to.
The next family that comes to our offices with a question about the duration of their claim review deserves a system that gets everything right the first time. Until this becomes the norm, not the exception, the assumption that 'the fund will solve the problem' remains an assumption that South Africans cannot afford.
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