Lize de la Harpe, Senior Legal Advisor: Sanlam

Introduction

Section 37C of the Pension Funds Act, 1956 regulates the payment of lump sum death benefits that become payable by a retirement fund when a member dies. Section 37C does not set out the method for calculating the fund death benefit payable – this is set out in the fund rules.

Let’s take a look at a recent Financial Services Tribunal decision where the fund’s handling of a fund death benefit calculation error came under the spotlight.

L M Rodrigues Crawford v PFA & other Case No. PFA27/2026 (22 September 2026)

The deceased was employed by Eskom from 4 July 1988 to 31 July 2021 when he resigned. At the time of his death, he was a deferred pensioner of the Eskom Pension and Provident Fund.

In April 2023, after concluding its investigation, the Board resolved to allocate 100% of the death benefit to the surviving spouse. Initially, the death benefit was calculated as roughly R5m, which amount was communicated to the complainant and as such was the amount she expected to receive (taking into account that there would be tax deductions). The Fund later discovered that interest had been incorrectly added beyond the date of death of the deceased. It therefore recalculated the investment value as R4.8m. The Fund subsequently requested its actuary to recalculate the lump sum benefit, and the conclusion was that the benefit payable was in fact only (roughly) R4.7m, which is the amount that was eventually paid to the spouse in two separate instalments.

The applicant disputed the recalculated benefit, citing incomplete documentation, lack of transparency, and procedural unfairness, particularly the absence of benefit statements for five years. The Fund explained that the missing benefit statements could not be retrieved and that actuarial estimates were used as permitted by Fund rules. The Fund also maintained that benefit statements are not a promise to the members that the amount reflected will be paid to them or their beneficiaries when they terminate their membership or upon death – which is in line with the Fund rules – and it is clearly stated in the benefit statement itself that all communications around values are non-binding estimates.

Dissatisfied with the Fund’s response, she lodged a complaint with the Pension Funds Adjudicator (Adjudicator). The Adjudicator dismissed her complaint on the basis that she was not entitled to the erroneously overstated amount. She then brought an application to the Financial Services Tribunal for reconsideration of the PFA’s determination.

The applicant claimed that she requested complete benefit statements to verify the disputed amounts, but the documents were not provided to her, and that the reduced lumpsum was paid to her without any prior notification and explanation of a recalculation. In her view, there were simply too many inconsistencies in the dates and amounts communicated by the Fund, and that without the complete benefit statements it was impossible for her to accept the Fund’s revised amounts.

Acknowledging the fact that the Fund rules made provision for an actuary’s estimation as the basis for calculating pension benefits, the applicant confirmed that she did not seek that the Tribunal disregards the Fund rules – instead, her grievance centred on whether the Fund had properly produced the final benefit calculation. Considering the fact that there were missing benefits statements, that the Excel spreadsheet with the actuary’s calculations was unsupported by documentary evidence and that the first respondent had communicated several differing figures as the lump sum due to her, even after a recalculation was done, her concern was that she was not afforded sufficient support for the recalculation.

The first respondent maintained that it had been transparent with the applicant and communicated developments via email. However, it could not produce documents evidencing the basis for the actuary’s recalculation.

Based on the facts, the Tribunal agreed that the Fund complied with its rules in engaging in a recalculation and not paying the applicant the overstated amount – any interference with this conclusion would thus be unjustified.

However, the Fund rules also state that every resolution of the Board certified by the Chairperson shall be accepted as sufficient proof of the resolution having been duly passed by the Board and every certificate signed by the Chairperson shall be accepted as sufficient evidence of the facts stated therein. Despite the aforegoing, the Board did not have the spreadsheet of the missing financial statements and therefore did not consider their effect on the benefit amount.

As such, the applicant had incomplete financial records and a spreadsheet which is not part of the record. Similarly, the second respondent did not have material documents when he determined the complaint.

The basis of the applicant’s complaint was aimed at the process of assessment undertaken by the respondents. And her concerns were therefore warranted in the circumstances. On this basis, the Tribunal set aside the Adjudicator’s decision and remitted the matter for reconsideration, instructing the Fund to better explain its calculations and methodology to the applicant.

Conclusion

The object of the Board of trustees as set out in the Pension Funds Act is to direct, control and oversee the operations of a fund in accordance with the applicable law and rules of the fund. One of the most important duties of the Board is to give effect to the rules of the relevant fund insofar as these do not conflict with the law.

That is however not the end of it – sections 7C and 7D set out other duties as well, including ensuring that proper records of the operations of the fund are kept and ensuring that adequate and appropriate information is communicated to the members and beneficiaries informing them of their rights, benefits and duties in terms of the rules of the fund. This determination is a stark reminder of the importance of proper record keeping and transparent communication.

ENDS