- The Financial Services Tribunal ruled that life annuities end on death and cannot be redistributed to dependants.
- The tribunal found the Pension Funds Adjudicator correctly declined jurisdiction because the dispute did not involve pension death benefits.
- The application was also filed too late, and any possible claim had long since prescribed.
A woman's bid to claim money from her late parents' retirement benefits has failed after the Financial Services Tribunal ruled that the payments were life annuities that ended on their deaths, not pension death benefits that could be redistributed to dependants.
Tribunal chairperson, retired Judge LTC Harms, dismissed an application by Chantel English to reconsider a decision of the Pension Funds Adjudicator. The respondents were the Nedgroup Pension Fund, administered by Old Mutual, and the Pension Funds Adjudicator.
Retirement product determined the outcome
English approached the tribunal in an effort to obtain money from her late parents' retirement benefits to help support her sister, who has required special care since birth because of a disability.
She argued that the pension fund had failed to identify and consider all of her parents' dependants when dealing with the benefits following their deaths in 2008 and 2009. English acknowledged that the family had not disclosed her sister's condition at the time, saying they were unaware of the legal requirements.
Judge Harms questioned that explanation. “If regard is had to the legalistic nature of the papers filed by the applicant, it is difficult to accept that she is the lay person she claims to be," he said.
Why the claim failed
The tribunal found that the outcome turned entirely on the type of retirement product involved. Unlike pension fund death benefits, which may have to be distributed to financial dependants under Section 37C of the Pension Funds Act, a life annuity pays income only for the lifetime of the annuitant, or for the lifetime of a surviving spouse where the policy provides for it.
Once the annuitant dies, the payments stop, and there is generally no remaining benefit that can pass to children or other dependants. The Pension Funds Adjudicator explained that English's late father had a life annuity that continued paying his wife until she died.
Her own single-life annuity also came to an end when she died. The adjudicator told English, "Section 37C of the Pension Funds Act does not apply to living or life annuities."
Judge Harms agreed, finding that because no pension death benefit existed, the Pension Funds Adjudicator had correctly concluded it had no jurisdiction to investigate the complaint.
No benefit existed for dependants
During the reconsideration proceedings, English accepted that Section 37C did not apply but argued that the real issue was whether her disabled sister's eligibility for benefits had been properly investigated.
The tribunal found that the argument could not succeed because there was no pension death benefit to investigate. "If such a 'pension' did not exist, eligibility does not arise," Judge Harms said.
He added that English appeared to be advancing a different legal argument from the one originally raised, but there was nothing in the fund's rules that entitled the children to receive benefits after both life annuities had ended.
Application was also filed too late
The tribunal found that English filed her reconsideration application well outside the statutory 60-day period following the Pension Funds Adjudicator's dismissal of her complaint.
She asked the tribunal to condone the delay, arguing that she was a layperson unfamiliar with the procedural requirements. Judge Harms rejected that explanation. "The second part of the statement is palpably untrue," said the chairperson.
The tribunal also found that any possible claim would, in any event, have prescribed because the events giving rise to the dispute dated back to 2008. It further noted there was no legal obligation on the fund to retain records indefinitely.
Tribunal dismisses application
Although Judge Harms acknowledged English's frustration, he found there was no legal basis for the application. "Although one can understand the applicant's frustration, the application has no merit," he said.
The tribunal dismissed English's application for condonation, with the result that her reconsideration application lapsed without the tribunal reconsidering the merits of the Pension Funds Adjudicator's decision.
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