Muvhango Lukhaimane, Pension Funds Adjudicator

A death benefit nomination form is a guideline for a provident fund when distributing benefits, as the fund has the discretion to allocate the benefit as it deems equitable, even if it deviates from the nomination, says Pension Funds Adjudicator, Muvhango Lukhaimane.

She said the fund is required to investigate and consider numerous factors, including the deceased’s dependants and their financial needs, before making a final decision.

Ms Lukhaimane was commenting in a matter in which a stepdaughter lodged a complaint with the Office of the Pension Funds Adjudicator on behalf of herself and her mother who was the deceased’s estranged wife.

The deceased was employed with Putco (Pty) Ltd and was a member of the Larimar  Group Provident Fund from 5 July 2006 until he passed away on 23 May 2023. The deceased was survived by his customary wife, two adult sons, adult nephew, estranged civil wife and adult stepdaughter.

Upon the deceased’s death, a death benefit of R1 399 122.01 became available for allocation to his beneficiaries. The board allocated the death benefit as follows: 70% to his customary wife, and 10% to each of the two sons and a nephew.

The complainant submitted that the deceased was in a civil marriage with her mother. The deceased and the complainant’s mother were separated but never divorced. The complainant was unhappy that she and her mother had been excluded as beneficiaries although her mother had signed documents for the deceased’s funeral benefit to be released even though she was the estranged wife.

The fund submitted that the deceased completed a beneficiary nomination form where he nominated the complainant, her mother, and his two sons as beneficiaries. He did not provide an allocation percentage in his form.

The fund said it conducted an investigation in terms of section 37C of the Pension Funds Act and established the following: the two sons were unemployed, not living with the deceased at the time of his death and not financially dependent on the deceased. The customary wife lived with the deceased until his death, was unemployed and financially dependent on the deceased. The nephew lived with the deceased, was employed and was financially dependent on the deceased.

The fund submitted that it considered the beneficiary nomination form. However, the complainant and her mother were not financially dependent on the deceased at the time of his death.

The fund submitted that while the complainant was under the impression that her mother was entitled to a death benefit because the employer asked her to sign documents to release the deceased’s funeral benefits, the mother was no longer in a relationship with the deceased and was not dependent on the deceased.

The fund submitted that although the complainant and her mother were nominated as beneficiaries in 2006, the nomination form was not binding on the board.

The fund submitted that it conducted a thorough investigation and the allocation of the death benefit was done in accordance with section 37C of the Act.

In her determination, Ms Lukhaimane said the complainant’s reference to the funeral benefit had no bearing as it did not form part of the lump sum death benefit.

She said it is the board’s responsibility when dealing with the payment of death benefits to conduct a thorough investigation to determine the beneficiaries, to thereafter decide on an equitable distribution and finally to decide on the most appropriate mode of payment of the benefit payable.

While the complainant was dissatisfied that the fund did not allocate the deceased’s death benefit in accordance with his beneficiary nomination form, it should be noted that the board was not bound by a nomination form. Also, the complainant and her mother were not living with the deceased and were not financially dependent on him for more than 15 years. On the other hand, the deceased’s customary wife who was unemployed and shared a household with him, as well as his two sons and nephew, were all dependent on the deceased.

Ms Lukhaimane said the fund did not abuse its discretion in the allocation of the deceased’s death benefit which was properly allocated to the dependants. The complaint was dismissed.

ENDS