The failure by an employer – in this case the South African Police Service – to submit death claim documents timeously resulted in life assurance benefit claims by two families being repudiated.
The Pension Funds Adjudicator Muvhango Lukhaimane said this placed an unnecessary burden on taxpayers as the SAPS would have to pay the amount to beneficiaries that would have normally been paid by the insurer.
She ordered the pension fund to educate the SAPS of its role and responsibility in terms of the fund rules.
Two widows – Ms GS Shongwe and Mrs BC Kubeka – complained that the South African Local Authorities Pension Fund (first respondent) and the SAPS (second respondent) were responsible for the repudiation of the death claims.
Ms Shongwe’s husband EM Buthelezi passed away on 26 July 2012. He worked for the SAPS all his life.
Following his demise, a death benefit was paid to the deceased’s dependants. However, a life assurance benefit claim was repudiated by the insurer on grounds of late lodging of the requisite claim documents by the second respondent.
The complainant was dissatisfied with the quantum of the death benefit paid to her. She submitted that the deceased was a loyal employee of the second respondent for 30 years and thus believed she was entitled to a greater benefit.
The first respondent submitted that although the deceased died on 26 July 2012, the death notification form was stamped 2 October 2013.
It stated that its administrator confirmed that the Group Life Assurance was not paid to the beneficiaries as it was declined by the insurer due to late notification of more than 12 months. It submitted that the second respondent failed to submit the claim in time in terms of rule 9.1.1 of its rules.
The second respondent failed to provide a response to the complaint.
Ms Kubeka said following the death on her husband P Kubeka, a death benefit was paid to the deceased’s dependants. However, a life assurance benefit claim was repudiated by the insurer on grounds of late lodging of the requisite claim documents by the second respondent.
She said she submitted all the relevant information to the second respondent in time. However, the fact that the second respondent then failed to forward the necessary claim documents to the insurer in time shocked her.
She said she was thrown from “pillar to post” since 2012, as a result of which she was struggling to take care of the needs of her family.
She and her children no longer had medical aid cover as it was terminated and she could not afford to pay for her children’s schooling as she was unemployed.
The first respondent submitted that having investigated the matter, it established that claim documentation was received from the second respondent on 25 September 2013 despite the date of the deceased’s death being 1 October 2011, meaning that claim documents were only received after 23 months of the deceased’s demise.
The second respondent again failed to provide a response to the complaint.
In her determination, Ms Lukhaimane said the entitlement to and payment of a death benefit was governed by the first respondent’s rules.
In this instance, the death benefit claim had been repudiated by the insurer on the basis that the insurer was informed about the deaths after the required time had lapsed.
“Had the second respondent submitted the death claim documents timeously, the dependants in both cases would have been entitled to a benefit as provided for in rule 6.1.2.
“Thus, the beneficiaries and dependants ought to be placed in the position they would have been had the second respondent submitted all the required and necessary documents pertaining to the death benefit claim in time.
“It is imperative for the first respondent to educate the second respondent of its role and responsibility in terms of the former’s rules.
“The unwarranted payment of the death benefit by the second respondent would presumably be funded from the budget allocation of the second respondent from the fiscus.
“This amounts to a waste of tax payers’ funds as the death claim was an insured benefit that would have been settled by the registered insurer and premiums were paid duly.
“It is not the first instance where a division of the second respondent failed to timeously lodge a death claim resulting in its repudiation.
“Therefore, in order to prevent a recurrence of this nature, the first respondent must ensure that the second respondent is aware and kept abreast of its obligations in terms of the former’s rules.”
Ms Lukhaimane ordered the second respondent to pay the beneficiaries in both matters the outstanding death benefit plus interest.
