Adv. Sankie Morata CFP®, CEO of Sanlam Trust
When a retirement fund member passes away, the focus often shifts immediately to the death benefit allocation process. Who were the dependants? Are the records complete? Is there a surviving spouse, children from a previous relationship, a life partner, or a minor child who may not be immediately visible to the family?
These are critical questions. But for principal officers and trustees, the bigger question is this: how much of the work should already have been done before the member passed away?
Ahead of Sanlam Trust’s upcoming webinar for principal officers on the 7th of May at 10am, it is worth reflecting on the role that retirement funds play long before a claim is submitted. Beneficiary funds are often spoken about as the solution after a member’s death. In reality, they should form part of a fund’s broader readiness and governance thinking while members are still alive.
Beneficiary funds exist to protect minor beneficiaries when death benefits from retirement funds or group life schemes are allocated for their care. They keep the money safe, invest it, and provide structured support for the child’s day-to-day needs. In many cases, they step in at a time when a child has lost a parent, a household has lost income, and a family is trying to make sense of both grief and administration.
But the effectiveness of a beneficiary fund is often shaped by the quality of the information, processes and decisions that come before it.
“One of the most important things a retirement fund can do is know its members well,” says Advocate Sankie Morata CFP®, CEO of Sanlam Trust. “When records are incomplete or outdated, the people who suffer most are often the dependants who are already vulnerable.”
For principal officers, this means beneficiary nomination forms should not be treated as once-off paperwork completed when someone joins a fund. Life changes. People get married, divorced, separated, or enter long-term partnerships. Children are born. Families become blended. Some children are raised by grandparents, aunts or other caregivers. In the South African context, family structures are often complex and deeply personal.
When this information is not kept up to date, trustees may be left to reconstruct a member’s life at the worst possible time, often through grieving relatives who may not have the full picture, or who may have competing interests.
This is where readiness becomes a real governance responsibility.
Principal officers and trustees should ask whether their fund has practical measures in place to encourage members to update their beneficiary information regularly. Are these reminders built into annual communication? Are HR teams and participating employers equipped to explain why this matters? Do members understand that beneficiary nominations are not only about administration, but about protecting the people who depend on them?
The same applies to the selection and oversight of beneficiary fund administrators. Boards should look beyond price and process alone. Governance, compliance, service standards and investment oversight remain essential, but so does the administrator’s ability to deal with vulnerable families in a practical and humane way.
A child may need school fees paid on time. A guardian may need clarity on monthly maintenance. A beneficiary approaching adulthood may need guidance before receiving a final payout. In some cases, the most meaningful support is not a generic value-add, but something that meets the real needs of the child’s life, such as education support, transport, food, or assistance with documentation.
“Beneficiary funds must never become distant from the real lives of the children they serve,” says Morata. “Good administration is important, but care, communication and understanding are just as important when you are dealing with a child’s future.”
There is also an important risk dimension. Poor records and delayed investigations can contribute to unclaimed benefits, disputes, overlooked dependants and reputational risk for funds. In extreme cases, they can result in a child losing out on support that was intended for them.
This is why principal officers should see beneficiary fund planning as part of their fund’s broader risk and member education strategy. It is not something to consider only after a death claim arises. It belongs in trustee training, member communication, HR engagement and governance reviews.
These are some of the conversations the industry continues to grapple with. While the technical purpose of beneficiary funds is well understood, the real question is how prepared funds are for these moments before they happen, and whether the outcomes truly support the next generation.
These themes, including financial literacy, integrated financial planning and governance, will be unpacked further in Sanlam Trust’s upcoming engagement with principal officers.
Because when a member dies, the clock starts ticking. Families need answers. Trustees need reliable information. And children need protection.
But ultimately, this is about more than process. It is about the legacy a member leaves behind, and whether that legacy translates into real support, dignity and opportunity for the next generation.
The better prepared a fund is before that moment, the better chance we have of ensuring that no child is forgotten, no benefit is left idle, and no legacy is lost.
ENDS
