Contributed by Vincent Shimutwikeni, B. Juris, LLB (honours), CGRC-BP™, Manager: Legal Support

Background:
The employer of a pension fund member claims that the member defrauded them. The member committed suicide, and the employer did not obtain a written admission of liability or a judgment under Section 37D. Due to the member's death, the employer's pension fund must distribute the death benefit arising from the member's passing to their beneficiaries. The employer believes that the executor may sign the admission of liability on behalf of the deceased member as required under Section 37D, and can then instruct the fund to deduct the loss resulting from the member's fraudulent actions from the beneficiaries' benefits.

Discussion: 
In the outlined scenario, the employer's claim that the pension fund member defrauded them adds a layer of complexity to the distribution of the death benefits under the Pension Funds Act (Section 37D). Let’s break down the situation step by step.

Understanding Section 37D and Fraudulent Conduct
Section 37D of the Pension Funds Act permits pension funds to withhold, reduce, or set off pension benefits against amounts owed by a deceased member, including in cases involving fraud or misconduct. However, Section 37D does not provide an automatic mechanism for reducing the death benefit — it requires an admission of liability (e.g., through a document signed by the relevant party, often the member while alive or the executor posthumously) or a court judgment that establishes liability.

Executor’s Role and Authority
In cases where the member is deceased (especially in cases involving fraud), the executor of the estate is responsible for administering the deceased's assets and liabilities. However, the executor's powers are typically limited to the administration of the estate and not to assuming personal liability for the deceased’s actions, unless there is a clear legal basis to do so.

In the above scenario, the employer seeks an admission of liability from the executor to reduce the death benefits due to the deceased's fraudulent actions. The executor would be asked to sign this admission on behalf of the deceased and then instruct the pension fund to deduct the loss arising from the fraud.

Can the Executor Sign an Admission of Liability?
Generally, the executor can sign documents and take actions related to the estate. However, the issue here is whether the executor can sign an admission of guilt or liability on behalf of the deceased, especially without a court order or a written admission from the deceased while they were alive.

• The executor typically steps into the deceased’s shoes to administer the estate, and their actions must align with the deceased’s interests. However, the executor cannot be held personally liable for actions taken by the deceased.
• In the case of fraud, there are complications: the executor is not typically authorised to sign documents that admit fraud or liability for the deceased unless it’s based on clear legal grounds. The executor's role is to administer the estate according to the deceased's will (or laws of intestacy) and to resolve any outstanding claims or liabilities. The executor’s role does not extend to creating new liabilities, especially not in the form of admissions of guilt or wrongdoing, which are personal and subjective acts of the deceased.

What is the Executor’s Authority in This Situation?
For the executor to sign the admission of liability, the following considerations must be addressed:

1. Court Judgment or Agreement: If the employer is claiming fraud, they would need to prove the fraud through a court judgment. The executor may not simply sign an admission of fraud without a clear legal basis. Signing such a document without clear authority could expose the executor to liability or legal challenges.
2. Fraud Determination: If the fraud is not yet established through a court judgment or written admission from the deceased, the executor would need to involve a court to approve or decide whether the deceased was indeed fraudulent and whether the pension fund can lawfully reduce the death benefits.
3. Executor’s Fiduciary Duty: The executor must act in the best interests of the estate and its beneficiaries. Any action taken, including signing an admission of liability, must be justifiable and not in violation of their fiduciary duty. If the executor signs an admission of liability in favour of the employer’s claim, it could affect the beneficiaries' share of the death benefit, which must be carefully considered.
4. Consultation with the Pension Fund: The pension fund itself would likely require substantial evidence of the fraud or misconduct before agreeing to deduct any amount from the death benefit. Even if the executor does sign an admission of liability, the pension fund may require independent verification or a court order before acting on that admission.

Conclusion
While executors have significant powers regarding the administration of a deceased person's estate, they do not automatically have the authority to admit the deceased's liability for fraud or misconduct on their behalf, especially when this involves reducing the beneficiaries' death benefits.

In this case, the executor can sign an admission of liability, but only if there is a clear legal basis for doing so, such as a court order, a clear written admission of fraud from the deceased while they were alive. Without these, the executor might be overstepping their authority or making a decision that the beneficiaries could legally challenge.

It would be prudent for the employer to pursue a formal court procedure to establish the fraud and reduce the death benefits in a legally sound manner. This would provide clarity and protect both the employer and the executor from potential legal risk.

In the absence of a written admission by the deceased member or a court judgment obtained during their lifetime, section 37D(1)(b)(ii) does not permit any deduction from the death benefit. The correct avenue for the employer remains a creditor’s claim against the deceased's estate, to be considered by the executor during the administration process.