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A technical analysis by Sabine Halberstadt (BA, LLM), legal consultant at RFS

1. Introduction

In a previous article we commented on the disposition of unclaimed benefits through payment to the Master of the High Court. The Administration of Estates Act directs how moneys are to be disposed of that have remained unclaimed for 5 years. In the pensions industry there are no common practices with regard to disposing of unclaimed benefits. In this review the author discusses the legal requirements that pension funds should be aware of.

2. Interpreting statutes

One of the techniques used when interpreting any statute is to establish what the legislator’s intention is. The Pensions Fund Act is silent on what should happen to unclaimed benefits. Clearly the legislator could not foresee in the 1950’s that the employer- employee relationships will change so drastically in the decades to come. At that stage many employees started their career with one employer and remained in his employment until retirement. The employer- employee relationship was probably slightly different from today where it is acceptable to change jobs every 2-5 years. Not to mention the changes in the modern family composition. Unclaimed benefits were probably not an issue back in the 1950’s.
It is trite law that there is a duty on trustees to do everything in their power to trace beneficiaries and/or dependants. How long should trustees be given to trace people? Should it be one year, three years or five years? Funds prefer to be “clean” and get these unclaimed benefits off their books.

3. Fund rules

NAMFISA has approved various rules and rule amendments dealing with unclaimed benefits. For some Funds the money must be claimed within 3 years after it became payable otherwise the money will be dealt with in terms of the Prescription Act. This means that money that has not been claimed within 3 years is forfeited and is allocated to the Fund’s reserve account. Other Funds pay money over to the Master of the High Court once the period mentioned in the Fund’s Rules has lapsed. Can the Master accept such unclaimed monies?

4. Process prescribed in the Administration of Estates Act and powers of the Master

It should be borne in mind that the Master is a creature of statute with only those powers given to it in terms of the Administration of Estates Act, in terms of which Act the Guardian’s Fund was established. In terms of this Act a person who holds money on behalf of another person for 5 years, must each year in January* advertise in the Government Gazette which monies will be paid over to the Guardians Fund if not claimed within 3 months of the advertisement.

5. Offsetting costs against unclaimed benefits

One of the arguments of NAMFISA is that the costs of the advertisement in the Government Gazette may not be deducted from the unclaimed benefit as this will be a reduction of the benefit. Whether this indeed amounts to a reduction in benefit as stated by NAMFISA, is a topic of its own. Section 93(2) of the Administration of Estates Act states that a person may deduct the advertisement costs from the unclaimed amount. It is quite an anomaly that the regulator is willing to approve rules/rule amendments in terms of which unclaimed benefits can be forfeited to a Fund while in cases where costs of advertising in the Government Gazette (which are very low) may be deducted as per a later act, they see the deduction of costs as a reduction in benefits.
An argument by trustees and consultants is that the average Namibian citizen does not read the Government Gazette and will therefore not be aware of unclaimed benefits due to them. This might be the case but it should be kept in mind that the advertisement in the Government Gazette is a legal requirement while the duty to trace dependants/former members remains. There is therefore nothing that prevents trustees to also advertise in ordinary newspapers before the 5 years have lapsed.

6. The Master’s practice of receiving unclaimed benefits

In practice the Master has accepted and still accepts unclaimed monies before the expiry of the 5 year statutory period and without advertisement in the Government Gazette. But as stated earlier, the Act is silent on whether the Master may in fact accept money that was not held for 5 years and not advertised.

7. Does the Master have the discretion to receives moneys sooner than 5 years

The author’s view is that the Act does not give the Master of the High Court the discretion to accept money that is kept by a person for less than 5 years and which unclaimed money was not advertised in the Government Gazette before it was paid over to the Master of the High Court.

However there are writers who are of the opposing opinion that if an Act is silent or does not specifically prohibit something, it is not unlawful to do something which is not directly dealt with in an Act. This question therefore needs further investigation to determine whether any court cases have dealt with situations like this.

8. The implication of unconstitutional provisions in the Act

Referring to section 93(3)(a) and (b), as quoted below, the Administration of Estates Act clearly contains unconstitutional and other provisions that cannot be complied with. There are still numerous pieces of legislation that are unconstitutional. The best example is probably the Native Proclamation 15 of 1928 dealing with marriages north of the Police Zone (red line). Normally marriages concluded in Namibia are in community of property unless there is an ANC.
According to this proclamation however, marriages between “natives” are out of community of property (without ANC) unless prior agreement to the contrary, which the Magistrate solemnizing the marriage then indicates on the marriage certificate.
As the Courts cannot mero motu decide that a piece of legislation or a part of a statute is unconstitutional and refer it to the legislature to be amended, numerous people are still affected by this provision. This will remain the situation until a party, having a direct interest in this matter, probably when instituting a divorce, applies to court to have this proclamation, or parts thereof to be declared unconstitutional and then the Court can refer it to the legislature to be repealed and or amended.
The provision of the Administration of Estates Act is therefore valid, even if it is unconstitutional, until a person or persons apply to court to have it declared unconstitutional. Seeing that the money due to ‘black persons’ must be paid to an institution that does not exist here in Namibia, the provision of the Administration of Estates Act cannot be complied with and should monies due and payable to members of such an ethnic group be dealt with like monies due to any member of any other race.
Articles 10 and 66 of the Namibian Constitution are quoted here for ease of reference:

Constitution of Namibia
Article 10:Equality and Freedom from Discrimination
(1) All persons shall be equal before law.
(2) No persons may be discriminated against on the grounds of sex, race, colour, ethnic origin, religion, creed or social economic status.
Article 66 Customary and Common Law
(1) Both the customary law and the common law in force on the date of Independence shall remain valid to the extent to which such customary or common law does not conflict with the Constitution or any other statutory law.
(2) Subject to the terms of the Constitution, any part of such customary or common law may be repealed or modified by Act of Parliament, and the application thereof may be confined to particular parts of Namibia or to particular periods.

9. Non-compliance with the Administration of Estates Act is a criminal offence

Failure to comply with these requirements of the Administration of Estates Act can result in penalties and/or imprisonment. It is not the Master who imposes penalties. None compliance with these provision constitutes a criminal offence. A complainant must lay a charge at the police and the Prosecutor-General decides whether prosecution should be instituted or not. The Court then has to decide whether a person/body has failed to comply with the statutory requirements. Of course, the ordinary Namibian is not aware of these remedies available to him.

10. Conclusion

In conclusion, and given that there are opposing views whether or not the Master of the High Court may accept unclaimed moneys prior to them having remained unclaimed for 5 years and without any advertisement having been placed in the Government Gazette, it is advisable that fund rules should be revised to provide that unclaimed benefits are to be paid over to the Guardians Fund after remaining unclaimed for 5 years and after it has been advertised in the Government Gazette.
Section 93 of the Administration of Estates Act is quoted here for ease of reference.

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. Retirement Fund Solutions Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of Retirement Fund Solutions.

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