Lebogang Mogashoa, Pension Funds Adjudicator
The Pension Funds Adjudicator has made it clear: a fund cannot hide behind actuarial tables when allocating a death benefit. Numbers alone do not absolve trustees of their duty to conduct a proper investigation and provide reasons for their decisions in the allocation of death benefits.
Lebogang Mogashoa said in a determination that every allocation demands a proper investigation into the circumstances of all dependants, and rigorous reasoning for decisions made, overlaid with good common sense. Actuarial models sometimes used to assist in allocation of death benefits are not a substitute for accountability. Trustees must weigh individual circumstances, not just statistical models, to ensure that allocations are equitable and just.
He said the true test lies in whether the board has properly explained and justified each decision, weighing all relevant factors and discarding the irrelevant. To merely cite an actuarial model in justifying a decision made during a death benefit distribution process is to abdicate responsibility – and to fail the standard of equitable distribution that Section 37C of the Pension Funds Act demands.
The Office of the Pension Funds Adjudicator received a complaint from the mother of the deceased concerning the allocation of a death benefit by the Old Mutual Superfund Provident Fund following the death of its member on 23 May 2025. A death benefit to the value of R417 096.39 became payable to the dependants of the deceased.
The board of the fund decided to allocate the benefit as follows: 70% to the spouse (Ms M) as a legal and factual dependent; 5% to the mother (factual dependent); 0% to a stepchild (factual dependent); 0% to a nephew (not dependent); 0% to a former partner (not dependent); and 25% to a minor child (legal and factual dependent).
The complainant submitted she is dissatisfied with the manner in which the fund allocated the death benefit. She said the allocation is prejudicial to the minor child who is the sole heir of the deceased. She submitted that the fund is treating Ms M as the spouse of the deceased despite being in possession of a lobola letter stipulating that the marriage was not yet finalised or completed. She submitted that Ms M was a fiancé and not yet the wife of the deceased.
She submitted that the fund allocated a larger portion to Ms M and indirectly also to her son, neglecting the fact that the deceased had only one minor child who is the sole heir of his estate and the only person who was completely financially dependent on the deceased at the time of his death.
She stated that the minor child is the sole legal and factual dependant of the deceased. She was allocated a residual that may not even be sufficient to maintain her livelihood to a state of independence and she is forced to share her late father`s benefit with the son of Ms M who is fully financially catered for by his paternal grandparents.
Ms R, the mother and legal guardian of the minor child,submitted that her financial circumstances have changed and this has affected her minor child. She submitted that the fund failed to adequately consider the minor`s financial vulnerability when making its allocation. She submitted that her child is a minor in Grade 11, with an estimated 7-to 8 years of ongoing financial dependency until she completes her tertiary education. She submitted that as her legal guardian, she is currently unemployed with no guaranteed income. She submitted that her financial instability affects the child`s welfare and her minor child is at risk of insufficient financial support for her education, daily living and long-term development.
She stated that the board of the fund failed to properly consider the minor child`s ongoing needs for education, living expenses and long-term wellbeing. She submitted that her child was awarded 25% of her father`s death benefit whilst Ms M received 70% of the benefit. She attached a statement from the minor`s school which reflects an outstanding school fees of R3 899.90.
Ms M submitted that she was in a customary marriage with the deceased and their relationship commenced from 16 June 2018 until the time of the deceased passing. She confirmed that she received a funeral payout of R60 000 and that she is employed as technical support agent and her monthly expenses have increased to R10 000.
She submitted that she received financial support from her mother demonstrating that her income alone was insufficient for household needs. She submitted that the deceased financially supported her by providing groceries and paying school fees for her biological son from a previous relationship.
She stated that she receives R2 200 monthly grant which she uses for her own expenses. She submitted that she is the deceased`s spouse, and is a presumed dependant and therefore, entitled to share in the deceased`s benefits as a beneficiary. She submitted that an application seeking confirmation and registration of her customary marriage is pending before the High Court.
The fund submitted that the board allocated the death benefit of the deceased by feeding information into its actuarial model that calculates the capital amount required to meet the financial needs of a beneficiary. The calculator apportions the member’s salary amongst the beneficiaries taking into account what the member could have reasonably afforded to support the beneficiary or their extent of financial dependence and calculates the capital amount required to support their financial need. It stated that after the capital amount is calculated, there can be an excess or deficit of capital depending on the benefit amount. It stated that in the present case, there was a deficit, meaning that the death benefit payable by the fund was not sufficient to cater for the financial needs of all the dependants identified.
The fund further submitted that with regard to the submission by Ms R, her request is based on alleged new developments, specifically that she has been unemployed since 29 January 2026 and is currently unable to financially provide for the minor child.
However, it stated the allocation of a death benefit may not be varied once the decision has been formally communicated to the dependants and affected parties. The allocation to the minor child will, therefore, remain unchanged.
In his determination, the Adjudicator said the litmus test in issues relating to the distribution of death benefits is whether or not a party was dependent on the deceased.
He said the fund must conduct an investigation into all beneficiaries and make an equitable distribution amongst dependants. Each dependant must be looked at as an individual and eligibility to allocation and the size of the allocation must be considered on an individual basis. Thus, the fund cannot use Ms M’s child to justify a large allocation to her. It has a duty to investigate the circumstances of Ms M and her child individually before making its decision and has thus failed to do so.
Furthermore Ms M is currently employed. She received R60 000 as a funeral payout and receives a social grant of R2 200. On the other hand, the deceased is survived by his minor child who is currently in Grade 11, with an estimated 7-8 years of ongoing financial dependency until she completes her tertiary qualification. She was awarded 25% of the death benefit which is far less than the allocation to Ms M. There is no proper justification from the fund on its allocation of 75% allocation to Ms M who receives a monthly salary and a social grant as opposed to a 25% allocation to a minor dependant of the deceased.
The submission from the legal guardian of the deceased’s minor child shows that she is no longer employed and the change of circumstance will affect the minor. Thus, based on the ongoing need of the maintenance of the minor child and the change in circumstance of the legal guardian, the Adjudicator is of the view that the fund must reconsider its decision, evaluate the circumstances of the minor child and exercise its discretion in terms of section 37C of the Act.
“The fund cannot base its decision solely on its actuarial method in allocating a death benefit without overlaying its results with good common sense and proper reasoning for the allocation of the benefit.
“An allocation of a death benefit requires proper and full investigation of the circumstances of all dependants in allocating the benefit equitably. Merely citing an actuarial model hardly provides proper justification for the decisions made by the board in allocating the benefit,” said the Adjudicator.
He ordered the decision of the board regarding the allocation of the death benefit to Ms M and the minor child to be set aside and ordered the fund to consider the financial needs of both and thereafter re-exercise its discretion.
ENDS
