Does the PFA have the power to substitute a board of trustee’s decision? Can the PFA change the decision with regards to the allocation of death benefits? When are adult children regarded as dependents and when not? These questions were recently addressed by the FSCA Tribunal.
The death benefit and the allocation
On the death of Mr T, his death benefit became available. The deceased had nominated three beneficiaries, namely Ms P (the Applicant) and his two adult daughters and had instructed in his pension nomination form that the benefits be allocated in proportions of 33% to each of his beneficiaries.
However, the pension fund, after investigations, allocated 70% to the Applicant and 15% each to the two daughters of the deceased. This allocation was contrary to the instructions of the deceased as indicated above.
Considerations by the pension funds
| ● | The deceased, Mr T, was the father of two adult women (his daughters) and a life partner of Ms P, the current Applicant. The deceased was divorced from the mother of the daughters. |
| ● | Before his death, the deceased instructed his attorney to ensure that on his death Ms P would have a usufruct giving her the right to stay in their home for the rest of her life. |
| ● | He also instructed that 50% of the cash remaining in his estate be allocated to Ms P while the other 50% was to be made available to his daughters. |
| ● | The pension fund was about to allocate 100% of the amount to Ms P, when the daughters halted the process for further investigation. |
| ● | As a result of the objections by both the daughters and Ms P, the board of trustees undertook to do a further investigation. |
| ● | Although the report of the investigation indicated that only Ms P could prove her dependence on the deceased and neither the daughters managed to provide concrete proof of factual support to them by the deceased, the pension fund still allocated 15% to each of the daughters and 70% to Ms P. |
The Tribunal’s assessment and legal framework
“In our view, the allocation appears like a cop out by the board of trustees and is indicative of an inability to make decisions based on the law and simple logic. It also smells of a desire to bend over backwards to advantage Ms P and disadvantage the daughters,” the Tribunal states in its case documents.
One of the grounds relied on by the board of trustees to exclude the daughters from eligibility to benefit from their father’s death benefit, is that as major children of the deceased, they do not qualify as dependants in terms of section 1(b)(111) of the Pension Funds Act. However, the reasoning is contrary to the provisions of section 1(b) (111) which provides as follows:” “Dependant” in relation to a member, means –
| a) | a person in respect of whom the member is legally liable for maintenance; | |
| b) | a person in respect of whom the member is not legally liable for maintenance, if such person. | |
| i. | was, in the opinion of the Board, upon the death of the member in fact dependant on the member for maintenance; | |
| ii. | is the spouse of the member; | |
| iii. | is a child of the member, including a posthumous child, an adopted child and an illegitimate child; | |
| c) | a person in respect of whom the member would have become legally liable for maintenance, had the member not died…” | |
According to the Tribunal, the word “child” must be understood in its ordinary meaning. It therefore refers to someone’s offspring, irrespective of such offspring’s age. Therefore, the conclusion reached in the pension fund’s investigation report that the two daughters are not the deceased’s dependants because of their status as majors, is obviously wrong. One becomes a dependant of a member of a pension fund by the mere fact that one is such member’s child. Age is not a required in order for a child of a pension fund member to qualify as a dependant. Consequently, the board of trustees’ decision to exclude the two daughters from sharing in their fathers benefit is based on the wrong legal premise.
“If a child of a member of a pension fund has not been nominated by the member, he will of course not be eligible to share in the allocation of the deceased’s death benefit where there are nominees, unless he can demonstrate that he has suffered damages in respect of his maintenance. In casu the daughters were nominees and as such qualified for allocation of the death benefit on this ground also,” the Tribunal mentions.
Furthermore, the Tribunal pointed out that Section 30E(1)(a) of the Pension Funds Act empowers the Pension Funds Adjudicator, after investigating a complaint, to make any order which a court of law may make. The Tribunal agreed that there was sufficient justification to conclude that the board was both incompetent and biased against the daughters and no plausible explanation was provided for their decisions.
Consequently, the application was dismissed.
Click here to download the detailed Tribunal case.
I’m employed as a cleaner at super are for more than 7 years ,I joined a funeral scheme that was introduced by the employer tne scheme name is NBC ,when I loose my child of which is a was listed as a dipendent I received nothing meanwhile I’m paying them and resently I just found out the the Fedcraw union can help a member who has lost a child,I need help ,thank you
It is best to lodge a complaint with the Pension Funds Adjudicator https://www.pfa.org.za/
Call Centre: 086 066 2837
Tel: 012 748 4000, 012 346 1738
Email: enquiries@pfa.org.za
Good day, I would like to refer to this tribunal case in my testament, but cannot seem to download the tribunal case with the link provided on your website. Can you perhaps provide me with a copy of this specific case and the case number?
Kind Regards
Unfortunately, the case was published by my predecessor two years ago. I don’t have the original case. I shall find out whether our administrator can fix the link or trace it.
I am highly disappointed and hurt to hear that my 2 daughters do not qualify for child pension fund after the death of their father (my husband). I feel like they are being phunished for the death of their father because they do not qualify for social grant and i am the only source of invome and what hurts more is for GEPF to let me run around like a headless chicken for mor than 2 years doing follow ups and was even told that verifications were made and there are no errors then boom only yesterday that i told that they do not qualify.💔💔💔
Greetings
My dad was a member of GEPF and passed away a year or two after retiring. I found out from them that I am not a beneficiary. I am included in his will. But want to find out if the pension will go to the estate or how to go about not being a beneficiary. I am 30, schooling (bursary), and unemployed. Was not dependent on him.
Thanks.
whom gets death benefit money? Lets say my sister has a kid, that kid is dependent on my sister and that sister is dependent on my dad. Does the child and the sister qualify for that or what?
Hi my father died 2005 He we employed by company called air technology services,we have never claimed any of his provident fund since we were also still young,can u plz advise on how to go about the claim
I suggest you contact the company’s HR department. They should know the name of the fund’s administrator, which you can contact about a claim.
I’m A spouse of the deceased with two kids but now that I want to claim for my late husband’s funds the company wants an affidavit from my in-laws with which they don’t want to do it for me so the offices tells me I can’t claim without the affidavit and we are legally married
I am 32 years and my brother is now 36 years. Our father separated with my mother when I was a baby. He never supported us although at times he would just give us just a small money for few things we were able to ask as we were now grown ups. His family and wife knows about us. We want to know if we could actually benefit from any of his death pension he worked for Union Carriage and Wagon company. If he did not list us in any death pay outs, would we be able to get any benefits?
Moonstone does not specialise in retirement funds compliance. I suggest you contact the Office of the Pension Funds Adjudicator: https://www.pfa.org.za/
My father worked at Spoornet and retired in 1990 and died in 1994,I was 13 years when he died and my younger sister was 7 years old we are his young children out of 11 that he had,I heard me and my younger sister were dependants but no one stood for us to help with educational funds from Spoornet now we are adults,I need help if we could still get the finance that was do to us
Hi my hubby past away in Mei this year he worked for a company for 5 years, He has a small pension fund we have a daughter of 10 together and I’m unemployed at present. My hubby has a son that now stays with the mum after he stayed with us. He is now 17 how much of the pension must go to the son. Please could you assist me. Regards Caryn
Hi I’m failing to understand the new law my brother paased away 2021 and we were part of his benificaries or we were nominated to get a certain percentage but the trustees decided to only give his children and said we don’t qualify even thou our names appear on his list, is this possible?
The trustees are not obliged to distribute benefits according to a beneficiary nomination form. If you believe you have a case to have their decision revisited, contact the Pension Funds Adjudicator: https://www.pfa.org.za/
I have a question my father passed away 29 years ago due to a accident on his way to the mine where he worked , my step mother received moneys from his pension fund as well as the road accidents fund monthly , now my step mom has passed away with now living relatives – does the pension fund as well as the road accident fund just fall away or can I claim it as I a my father’s only child – my step mom did not leave a last will and testament
Please advise,
The pension would cover your father and spouse (wife), not major (over 18 years) children.
Hey my father works at the government and now he doesn’t stay with us he has married another wife so my question is in case he dies and didn’t put us on the beneficiary list will we be able to get a potion of his money
If the trustees of the fund determined that you are a dependant, it is possible you will be allocated some of his death benefit.
My husband recently passed away, he had 5 children, 3 adults who are now working and 2 minors still at school. Will all the children get a share in their father’s money?
The trustees of the retirement fund will assess the extent to which the children were and are financial dependents of their father.
Good Day, my father was a teacher for a very long time, he passed away 13 yrs ago. Would any of these benefits be applicable today?