Being married to someone does not automatically entitle you to a share of their retirement fund when they die.
That’s the central message from a recent ruling by the Financial Services Tribunal (FST), which confirmed a decision by the Pension Funds Adjudicator. The case highlights that, under retirement fund rules, spouses must still qualify as dependants or be nominated beneficiaries –and not all do.
The matter involved the allocation of a death benefit by the Old Mutual Superfund Provident Fund following the death of a member, Ntaba Mate, in December 2022. At the time of his death, Mate was legally married to Pamela Mate, who later challenged the distribution of his death benefit.
After conducting its investigation, the fund’s board identified five potential beneficiaries: Pamela Mate, the deceased’s partner Nompumeleo Dameni, a major daughter, a major son, and his sister.
In the final allocation, Dameni – described as the deceased’s partner – received 65% of the benefit. The remaining 35% was shared between the deceased’s two children. Neither Pamela Mate nor the deceased’s sister received any portion of the payout.
Unhappy with the outcome, Mate lodged a complaint with the Adjudicator, arguing she had been unfairly excluded.
Grounds for reconsideration
In her application for reconsideration, Mate argued the fund’s decision unfairly favoured Dameni while excluding her – the deceased’s lawful wife – from any share of the benefit. She claimed the board failed to consider that she and the deceased had two children who were still financially dependent on them.
Mate referenced section 37C of the Pension Funds Act (PFA), which recognises two categories of dependants: legal and factual. She argued the fund improperly prioritised the needs of a factual dependant – Dameni – over those of legal dependants such as herself and her children.
She also warned that decisions such as this could have unintended social consequences. According to Mate, the ruling could incentivise spouses to pursue divorce rather than reconciliation, simply to secure a guaranteed share of retirement benefits through a divorce settlement.
In addition, Mate pointed out that Dameni, at 60 years old, was eligible for a government pension, whereas the other dependants were not. Allocating most of the benefit to Dameni, she argued, was therefore irrational, unfair, and unjust.
Fund’s submissions
The fund opposed Mate’s application for reconsideration, maintaining it had acted in accordance with section 37C of the PFA when it investigated the dependants and allocated the death benefit.
The fund argued that although Mate was legally married to the deceased, the couple had been separated for several years and were not living together at the time of his death. It further submitted that Mate was employed, had no disabilities or illnesses affecting her ability to work, and was not financially dependent on the deceased.
The fund emphasised that simply qualifying as a legal dependant does not guarantee a share of the benefit – dependency must be established based on several factors, including actual financial reliance on the deceased prior to death.
In contrast, the fund found that Dameni had been in a relationship with the deceased for more than 15 years, was living with him at the time of his death, was unemployed, and was fully financially dependent on him. Although she was eligible for a state old-age grant, the fund considered her long-term dependency when awarding her the bulk of the benefit.
Section 37C of the PFA
The Adjudicator, in her ruling, cited section 37C of the PFA, emphasising it is the responsibility of a fund to conduct a thorough investigation to identify the rightful beneficiaries of a death benefit. Once that investigation is complete, the fund must determine an equitable distribution of the benefit and the most appropriate method of payment.
In doing so, the fund is required to consider all relevant information and disregard any irrelevant factors. The Adjudicator noted this process involves assessing a range of considerations to ensure a fair and reasonable allocation.
The Adjudicator also referred to section 1 of the Act, which defines a “dependant” and recognises three categories based on the deceased member’s legal or financial duty of support: legal dependants, factual dependants, and future dependants.
In its assessment, the Adjudicator accepted the findings of the fund’s investigation – none of which was disputed by Mate. In light of the fund’s findings, Dameni, who was financially dependent on the deceased, was therefore identified as a factual dependant and included as a beneficiary.
The deceased’s two children with Mate, both in tertiary education, were recognised as legal dependants and also included in the distribution.
Mate argued that, as the deceased’s legal spouse, there was a reciprocal duty of support between them. On this basis, she claimed she fell within the definition of a dependant and therefore could not be lawfully excluded from receiving a portion of the benefit.
However, the Adjudicator found that the fund had considered all relevant factors and had not acted improperly or unfairly in the way it exercised its discretion. As a result, the complaint was dismissed.
Mate then took the matter to the FST.
No proof of financial dependence, no portion of the death benefit
In its ruling delivered on 8 April, the FST reaffirmed the discretion granted to retirement funds in distributing death benefits, provided the process is fair and based on proper investigation.
The Tribunal noted that a fund is required to identify and assess all the dependants of the deceased before deciding how to allocate the death benefit.
“Further, a fund is vested with a large discretion to determine, in the light of its assessment of the dependants’ respective needs, in what proportions the death benefit will be distributed among the class of dependants,” the ruling read.
Mate, the applicant, submitted that she was a legal dependant of the deceased by virtue of their marriage – a fact not in dispute. However, the Tribunal found that the fund had taken into account a range of relevant considerations in reaching its decision.
The Tribunal pointed out that the fund concluded that the available death benefit was insufficient to meet the current and potential future needs of all dependants.
And while Mate argued that it was wrongful for the fund to conclude that the deceased’s lawful wife was not entitled to any share of the benefit, the Tribunal rejected this argument.
“This submission has no basis in law. Being married to the deceased alone, without proof of financial dependence, as in this matter, does not automatically entitle the applicant to a portion of the death benefit,” the ruling read.
The Tribunal found no legal grounds to interfere with the determination made by the Adjudicator. The application for reconsideration was dismissed.
Read the full ruling here.
