The Financial Services Tribunal handed down its decision in a reconsideration application instituted by Claire O'Connor ("Ms O'Conor"), against Discovery Retirement Annuity Fund ("the RA Fund"), Discovery Investment Retirement Annuity Fund ("the IRA Fund") (collectively, "the Funds") and the Pension Funds Adjudicator ("the PFA"). Ms O'Conor applied for the reconsideration of a determination made by the PFA on 11 April 2024, in which it dismissed the complaint that she raised against the allocation of a death benefit by the Funds, following the death of Mr FLDB.
Mr FLDB was a member of the Funds until his passing on 3 August 2020. He had a life partner and fiancé, Ms KLOC, who passed away on 8 January 2023. Ms KLOC was the sister of Ms O'Conor, who was also Mr FLDB's business partner. Ms O'Conor was aggrieved because the trustees allocated Mr FLDB's entire benefit to his son, who according to Ms O'Conor, the sonwas estranged from his late father and was not nominated as a beneficiary in his policies. The nominated beneficiary was Mr FLDB's ex-spouse from his second marriage, Mrs JARDB.
According to the Decree of Divorce and the Settlement Agreement, there was no maintenance order against Mr FLDB at the time of his death. In addition, the agreement stipulated that each party would retain the benefits of their respective Retirement Annuities and Investment Policies, including the current death benefits. In addition, the Funds confirmed that they were notified by Mr FLDB's ex-spouse that she was not financially dependent on Mr FLDB and did not wish to claim the benefits from these policies.
When considering the evidence before it, the Tribunal noted that Ms O'Conor initially submitted a claim suggesting that she was the life partner of Mr FLDB, but later clarified that she was his business partner. In this regard, Ms O'Conor argued that she was financially dependent on Mr FLDB due to a salary dependency. Ms O'Conor also sought to claim the death benefits based on her late sister's status as the life partner of Mr FLDB. Ms O'Conor argued that her late sister would have been entitled to the benefits and, since she inherited her sister's estate, including Mr FLDB's policies, she was entitled to the death benefits.
The Funds were notified of Mr FLDB's death on 24 April 2023. On the same day they received a claim form from Ms O'Conor, who signed as Mr FLDB's life partner. However, Mr FLDB's sister, clarified that Mr FLDB had no financial dependants at the time of his death. Consequently, the Funds allocated Mr FLDB's death benefit to his son only. This resulted in Ms O'Conor filing complaints against the Funds and the PFA in November 2023.
After receiving the complaint, the Funds investigated the matter and based their recommendation on the following information:
- According to section 37C of the Pension Funds Act,1956 ("the Act"), a business partner does not qualify as a dependant; Mr FLDB had only one son who is his only legal dependant;
- Mr FLDB's ex-spouse did not claim as a dependant, was not financially dependent on him and there was no maintenance order against him at the time of his death;
- Ms O'Conor could not provide evidence of financial dependence on Mr FLDB; and
- Being the sister of Mr FLDB's life partner did not entitle Ms O'Conor to benefits from Mr FLDB's policies.
Based on the aforementioned reasons, the Funds allocated the entire benefit to Mr FLDB's son.
The Tribunal noted that the PFA's decision to dismiss Ms O'Conor's complaint was based on the definition of "dependant" as defined in section 1 of the Act. In addition, the Tribunal found that the PFA assessed whether the trustees of the Funds fulfilled their obligations under section 37C of the Act by conducting a thorough investigation and the trustees of the Funds exercised their discretion to make an equitable allocation.
Ms O'Conor's argument before the Tribunal was that the Supreme Court of Appeal held that pension fund payouts are decided by trustees, but that different laws apply to payouts of a retirement annuity, which are not decided by trustees. Ms O'Conor further contended that the Master of the High Court issued a Letter of Authority, appointing her as the Executor for Mr FLDB's estate on 5 March 2024, of which the estate had a retirement annuity. She also claimed that everything in Mr FLDB's estate went to her late sister, and that she was the sole beneficiary of her late sister's estate, and as such, the rightful beneficiary of the retirement annuity policy.
The Tribunal stated that upon a member's death, any benefit from a registered fund is generally not considered part of the member's estate, including an annuity death benefit. Instead, these benefits will be paid to the dependants if the fund identifies them within twelve months of the member's death. The fund's board of trustees will determine how to fairly distribute the benefits among the dependants.
Consequently, the Tribunal stated that the PFA correctly determined that although Ms O'Conor's late sister would have qualified as a "dependant" in terms of section 1(b)(ii) of the Act, Ms O'Conor's late sister is not entitled to a portion of the death benefit. This is because the sister had already passed away before the Fund was notified on 24 April 2023 of Mr FLDB's death, and as such she was no longer a dependant of Mr FLDB.
Additionally, the Tribunal highlighted that, Ms O'Conor's late sister was not a nominated beneficiary under the policies. Even if she had been, the board of trustees was not obliged to follow a beneficiary nomination form, as it serves only as a guide for their discretionary decisions. The only nominated beneficiary was Mr FLDB's ex-spouse, who informed the Funds that she was not financially dependent on Mr FLDB and thus chose not to claim the benefit.
Therefore, the Tribunal concluded that Ms O'Conor's claim that her late sister would have inherited the entire estate of Mr FLDB, and therefore the benefits should be paid to her, as beneficiary of her late sister's estate, was unfounded. The Tribunal held that Ms O'Conor, who is a business partner of Mr FLDB, did not qualify as a "dependant" in terms of the Act. The correct position was Mr FLDB's son qualified as his legal dependant in terms of section 1(b)(iii) of the Act, as he is Mr FLDB's child. This section includes major children of Mr FLDB who were not dependent at the time of his death.
The Tribunal also concluded that the PFA came to the correct decision that a salary alone does not establish dependency but indicates employment, especially since Ms O'Conor was a business partner of Mr FLDB. For the reasons set out above, the reconsideration application was dismissed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
