“A beneficiary fund is a form of retirement fund, where the dependant becomes a member. It prioritises responsible use of funds for the benefit of meeting the minor beneficiary's primary financial needs.
"Benefits can also be paid out to a guardian or caregiver, providing that the funds are used solely for the benefit of the child,” says Christopher Mwalo, the acting operations manager: Sanlam Beneficiary Funds and Umbrella Trusts.
A significant advantage is that it is governed by a board of trustees tasked to act in the best interest of the child. Their decisions are governed by the beneficiary fund’s rules, Pension Funds Act, court orders and any instructions from the retirement fund trustees. They are held to account on matters such as ensuring that children receive an optimal education and to conserve funds so that they have something left when they attain the age of majority.
Mwalo answers common questions about beneficiary funds: