Why do pension funds delay on-time payments?

Why do pension funds delay on-time payments?

This is a question that each member of a pension fund should ask. A pension fund, like any other retirement plan, is a safety net or “nest egg” that was established with the objective of providing benefits like a lump sum amount and monthly annuities to its members when they retire or to dependents of such members upon the death of such members.

If a member of a pension fund passes away before he or she reaches retirement age, the Pension Fund Act, Act 24 of 1956 (the Act), states that a fund should trace the dependents of a deceased member and pay such benefits to the dependents in an equitable manner.

The obligation that has been placed on a fund to trace dependents of a deceased member can be a cumbersome task if a member of a fund does not ensure that his/her personal file contains all relevant, complete, and up-to-date information while he/she was alive and still working.

It is therefore imperative that members of a fund ensure that their personal files are up-to-date at any given time so that once a benefit becomes due, the fund can distribute pension benefits to the members or dependents in a timely manner and prevent a break in the monthly disposable income. There are, however, several challenges when it comes to the timely payment of benefits by a fund to members and their beneficiaries. Most of these challenges that delay the payment of benefits can be attributed to incomplete, inaccurate, and/or lack of information that is required to process benefit payments.



Paper work crucial

The Government Institutions Pension Fund (GIPF) is equally affected by such situations. Some of the challenges that GIPF faces with the payment of death benefits are attributed to the lack of or outdated beneficiary nomination forms and issues related to full birth certificates, with the latter being the most significant one. Pension funds have come up with beneficiary nomination forms, which are a tool that a member can use to list his or her dependents with all relevant information with the purpose of easing the process of tracing.

Some members, however, either do not complete beneficiary nomination forms or, where they have done so, the information is not up-to-date and one would find that children that are born after a member has completed a nomination form are not added, or the ones who have passed on are not removed, or vice versa. A full birth certificate, on the other hand, is a legal document that links a child to a biological mother or father. At GIPF, most of the death benefit claims of members that are submitted to the fund have full birth certificates (FBC), but with information that is either insufficient or inaccurate.



Ensure all information is there

This is the information that is supposed to serve as proof that a specific child is the biological child of the deceased member.

The fund calls upon members to visit their employers’ HR departments and ensure that they have up-to-date and complete documents in their personal files. These documents should accurately capture the full birth certificates of biological children. If you are married, submit a certified copy of the marriage certificate. Also, members are encouraged to complete a beneficiary nomination form and submit it to the HR department. This will ensure that the fund can easily and timely trace dependents and pay benefits on time when they become due.