The will of an employee is a private matter. Whether your employees have one or not is, in an important sense, not your business. However, when an employee of yours dies without a will, and without nominating any beneficiaries for their pension fund, it becomes the responsibility of the pension fund trustee to identify beneficiaries.
The process is long, involved, time-consuming and frustrating – in short, it’s a situation you’d really rather avoid.
Frik Taljaard, General Manager: KreditInform, knows this better than anyone. Over a year ago, Taljaard realised that an employee had a terminal illness and checked that his pension fund beneficiary form had been filled out. Discovering it hadn’t, Taljaard lost no time in raising the ill man’s attention to the fact that filling out the beneficiary form was vital to ensure his family was taken care of after his death. Strangely, the employee refused, saying he intended to use the money when he retired to buy a car.
“I tried to explain to him that no one would get his money unless he died, in which case it would obviously be useless to him, but he seemed convinced that he wasn’t going to die and that signing the form would mean he was signing his pension away.” He continued refusing to sign the beneficiary form when Taljaard pleaded with him to do so only hours before he passed away. In the case where the deceased has an estate, trustees have to first establish the solvency of the estate, who the trustees are and whether there are any debts to be settled. In this particular case, there was no will and no estate.
In terms of Section 37(c) of the Pensions Fund Act, Taljaard as trustee of the pension fund was responsible for tracing dependants, minors and family members to whom the fund might be distributed. “This entails an enormous amount of work and the Act allows you one year to accomplish the task,” says Taljaard, relating how he had to conduct many hours of interviews with an increasing number of people who came forward claiming to be children, spouses and relatives.
“Verifying the truth of people’s claims is very difficult. There was no way to do DNA testing because the deceased’s mother had been buried over a year previously,” he explains, adding that in some cases, the Master of the High Court may use his discretion to request an exhumation of a buried body in order to verify claims. In Taljaard’s case, the matter has finally been resolved. “It is now in the hands of the trust administrators. There were only two children I could find whose claims were genuine. I recommended that a trust be created to administer the pension fund amount for their education and medical expenses until they are 21,” he says.
HR managers would do well to learn from Taljaard’s experience. Although a company can’t force employees to fill out the beneficiary form, as Taljaard discovered despite the most dedicated attempts at convincing his employee, there is much an HR manager can do to try and avoid a similar situation.
Check the forms of all your employees. “Afterwards, I checked all the beneficiary forms in our company, and would you believe, no less than seven people, some of whom included senior managers, had failed to fill them in,” Taljaard says. Most people have simply forgotten and will happily do so when reminded. But some employees may be unwilling. “In that case, try and counsel them. Explain that all it will mean is that their family will not see any money for at least a year after their death while the stipulated time-frame of finding beneficiaries passes,” advises Taljaard. “It’s also important to explain to employees the importance of having a will.”