Deirdre Phillips, Partner at Bowmans

On 8 August 2025, the Constitutional Court handed down a landmark judgment in Mutsila v Municipal Gratuity Fund and Others, reshaping the interpretation of section 37C of the Pension Funds Act, 1956 (PFA). The judgment critically (and fortunately some may say) revisits the precedent set by the Supreme Court of Appeal (SCA) in Guarnieri v Fundsatwork Umbrella Pension Fund (Guarnieri).

Brief background

The Constitutional Court addressed the interpretation and application of section 37C of the PFA which governs the equitable distribution of death benefits to dependants of deceased members of retirement funds governed under the PFA.

The case arose after the applicant, Ms Mutsila, challenged the Municipal Gratuity Fund’s (Fund) decision to allocate a significant portion of her late husband’s death benefit to Ms Masete and her children, whom the Fund had identified as factual dependants.  Ms Mutsila disputed the alleged customary marriage between the deceased and Ms Masete and the factual dependency on the deceased.

Key findings 

The Constitutional Court found that:

• The Fund failed to properly investigate factual dependency of Ms Masete and her children as required by section 37C, which tainted the Fund’s allocation and distribution decision.
• The Fund relied on unverified information and did not exercise its discretion properly.
• The SCA misdirected itself in finding that the applicant did not challenge factual dependency.

The Constitutional Court set aside all prior decisions and ordered the Fund to reassess the distribution within three months, based on the circumstances as of 9 April 2014 (when the Fund made its first determination).

Why a landmark judgment?

This is the first time the Constitutional Court has interpreted and applied section 37C.

The Constitutional Court directly overturns Guarnieri, which held 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’.

The Constitutional Court found this approach legally flawed and problematic from a practical perspective, for several reasons:

• Section 37C requires dependency to be assessed as at the date of the member’s death, not at the time of distribution.
• The definition of ‘dependant’ refers to past, not ongoing dependency.
• Changed circumstances after death may affect the allocation, but not the statusof a person as a dependant.

This judgment affirms the social security purpose of death benefits payable by retirement funds and the duty of retirement funds to protect vulnerable dependants.

It sets a binding precedent for all retirement funds, adjudicators, and courts.

ENDS