Municipal Gratuity Fund v The Pension Funds Adjudicator and Another

The deceased, Mr TE Mutsila, an employee of Ba-Phalaborwa Municipality, was a member of the Municipal Gratuity Fund. He died in December 2012, leaving death benefits of approximately R1.6 million. He was married in community of property to Ms Tshifhiwa Shembry Mutsila, with whom he had five children. Shortly before his death, he also maintained a relationship with Ms Masete, who had two minor children. The Fund investigated dependency in terms of s 37C of the Pension Funds Act and resolved to distribute the death benefits among Ms Mutsila, Ms Masete, and the children, based on legal and factual dependency. Dissatisfied with the allocation, Ms Mutsila lodged a complaint with the Pension Funds Adjudicator. The Adjudicator set aside the Fund’s decision and ordered, inter alia, payment of R300 000 to Ms Mutsila and a reconsideration of the balance. The Fund challenged the determination under s 30P of the Act.

The appeal was upheld. The order of the full court and the court a quo was set aside. The determination of the Pension Funds Adjudicator dated 8 September 2014 was set aside. Each party was ordered to pay its own costs.

The case affirms the importance of procedural fairness in proceedings before the Pension Funds Adjudicator, particularly the application of the audi alteram partem principle. It clarifies the non-peremptory nature of s 30A of the Pension Funds Act and confirms that s 30P proceedings constitute a reconsideration on the merits. The judgment also reinforces the discretion of pension fund boards in distributing death benefits under s 37C when a proper investigation has been conducted.