The SCA dismissed an appeal from Momentum's FundsAtWork umbrella pension fund, which had allocated 42% of the death benefit of one of its members to his dead mother.
FundsAtWork appealed against having to pay the legal costs of its member’s wife, as well as having to distribute the sum of R541 215, that was supposed to be paid to the mother.
FundsAtWork member Massimiliano Guarnieri and his girlfriend were killed in a vehicle crash and at the time Guarnieri was still married in community of property to Anna Guarnieri.
When Guarnieri died he was survived by his estranged wife, his two children and his mother, who was living in a home for the elderly.
The board had allocated 42% of the death benefit to Guarnieri’s mother, but made that decision four days after her death.
Judge of Appeal Malcolm Wallis’s judgment read: “The board added that it had been unaware that (Guarnieri’s mother) had died four days before it made its original decision in July 2014 and that it made the decision bona fide and in ignorance of the true situation. A half-hearted effort to lay the blame for this at the door of (Anna) was not pressed and was plainly unjustified.
“It was not her responsibility to keep the fund informed of the situation with her mother-in-law’s health. It was the fund’s obligation to keep itself abreast of the situation, especially as it was well aware that she was elderly, suffering from a life-threatening condition and in frail care.”
The initial distribution was set aside by the Pension Funds Adjudicator and remitted to the board for a fresh decision to be made.
The board made the same allocation as in its original decision. This was set aside by the high court at the instance of Anna and children.
The SCA held that on a proper interpretation of the definitions of “member” and “dependant” in the Pension Funds Act 24 of 1956 and section 37C(1)(a) of that act, for a beneficiary to qualify as a dependant and be allocated a portion of a member’s death benefit, he or she had to be alive at the time the distribution decision was made.
“Given all these considerations of language, purpose and practicality, in my view, the proper construction of section 37C(1)(a) is that the time at which to determine who is a dependant for the purpose of distributing a death benefit is when that determination is made and, furthermore, the person concerned must still be a beneficiary at the time when the distribution is made.
“That is the only way in which to ensure the persons identified as dependants are those whose interests the section seeks to protect.”
As this was not the case with Guarnieri’s mother, there had been no effective allocation to her and the board was required to make an allocation among the group of dependants constituted by the widow and children.
In allocating a portion of the death benefit to Guarnieri’s mother, it had made an allocation to someone who did not qualify for it and such allocation was a nullity.
The position was no different from one where an allocation was made and paid to a stranger.
There was no effective allocation in respect of that portion of the death benefit and the board was obliged to address that afresh.