Pension fund faulted after woman falsely claims share of R2m death benefit

A pension fund has been criticised after awarding part of a R2 million death benefit to a woman who later admitted she had never met the deceased or been in a relationship with him. The Pension Funds Adjudicator found the fund failed to properly verify the dependency claim and ordered the distribution set aside.

What happened

The complaint was lodged by the deceased’s mother after her son died on 29 August 2022. A death benefit of just over R2 million became available for distribution after a tax deduction of over R709,000 and the inclusion of R121,000 in interest.

In April 2024 the fund’s board resolved to allocate 30% of the benefit to each of the deceased’s parents and his sister, and 10% to the woman who claimed to be his live‑in girlfriend. Under that resolution each family member was to receive over R543,900 and the alleged partner R181,300.

Payments, disputes and shortfall

When payments were made in November 2023 each family beneficiary received over R512,300. The family disputed the payments, arguing that after SARS deductions over R1.9 million remained and each family member should have received over R649,300.

After repeated questions and direct engagement with SARS, the fund paid additional money to each family member but the family maintained that a further R85,841 remained outstanding.

The alleged girlfriend’s admission

The fund had told the deceased’s mother that part of the benefit had been allocated to an alleged girlfriend whose identity had not initially been disclosed to the family. The mother rejected the claim and said she could provide witnesses to refute it.

The fund said it relied on an affidavit from the alleged girlfriend and an affidavit from the deceased’s landlord and friend, which it said corroborated the woman’s claims. The fund also argued the mother lived in the North West while her son lived in Middelburg when he died, and so might not have known his living arrangements.

Pension Funds Adjudicator Lebogang Mogashoa joined the alleged partner to the proceedings and required her to respond. The woman admitted to the adjudicator that she had never met the deceased and had never been in a relationship with him. She said a friend had persuaded her to sign an affidavit and provide identity documents and a benefit statement so the friend could try to obtain money linked to the man. She said she had not received any benefit proceeds and was worried about being implicated in fraud.

Adjudicator’s findings and orders

The fund told the adjudicator it would refer the matter to its internal audit department because it now involved an element of fraud and criminality.

The adjudicator found the fund had accepted the alleged cohabiting partner as a dependent based merely on affidavits and had not taken adequate steps to verify the information. The adjudicator described the case as a

“classic example”

of the dangers of relying on affidavits without other reasonable methods of verification.

As a result, the adjudicator set aside the board’s decision on the distribution of the death benefit and ordered the fund to conduct a fresh investigation, to identify the deceased’s beneficiaries taking the determination into account, and thereafter to allocate and distribute the benefit.

Next steps

The fund was ordered to revisit its investigation and distribution process in light of the adjudicator’s findings.