If, on the death of member of a retirement fund, there are no dependants and only nominees, the death benefit, less any money owing to the estate, accrues to the nominees.
The Pension Funds Adjudicator, Muvhango Lukhaimane, ruled that this provision of the Pension Funds Act be complied with in a recent case in which a retirement fund paid a deceased member’s full benefit to his estate because the people he had nominated on the beneficiary form were not financially dependent on him.
Ms J complained to the adjudicator that the Metal Industries Provident Fund and Metal Industries Benefit Funds Administrators had failed to pay a death benefit to her within 12 months of the death of her partner, Mr W.
Mr W died on February 17, 2015. He was an employee of Circuit Breaker Industries Limited and a member of the Metal Industries Provident Fund. About eight months before his death, Mr W had completed a beneficiary form nominating Ms J to receive 90 percent of his death benefit and a friend of his, Mr S, to receive 10 percent.
On Mr W’s death, a benefit of R7 125 118 became available for distribution among his beneficiaries.
The provident fund said in response that Mr W’s wife had died in September 2013, and the couple had not had any children. Nor did Mr W have any siblings or other relatives. Mr W had been in a relationship with Ms J for about a year.
The fund argued that because dependency on Mr W had not been established for either Ms J or Mr S, the board awarded both of them a nil benefit and paid the R7 million into Mr W’s estate.
In her determination, Lukhaimane says: “Without any evidence to the contrary, it is the finding of this tribunal that the complainant was not a factual dependant of the deceased.”
However, she adds that section 37C of the Pension Funds Act states that where a deceased is not survived by any dependants and has completed a valid nomination form, the benefit shall be paid to the nominees listed on the form.
Lukhaimane says the fund’s board paid too much attention to establishing whether or not Ms J was a dependant or not. She says that where the deceased is survived by no dependants and there are only nominees, the value of the death benefit less the deficit of the estate accrues by right to the nominees.
She ordered that the decision of the board to pay the entire benefit into Mr W’s estate be set aside.
The fund was ordered to investigate whether the estate’s liabilities exceeded its assets and if so, to what extent. It was then to pay the nominees the remainder, as specified in the nomination form.