Skip to main content


Retirement death benefit- fund trustees can override a deceased member’s instructions


Johannesburg; 30 January 2017 - According to the 2015/2016 annual report from the Office of the Pension Funds Adjudicator, the allocation of death benefits constituted the largest number of resolved cases.

In the unfortunate situation where a member of a retirement or provident fund passes away, there’s no guarantee that the nominated beneficiaries will receive a cash payout as per the wishes of the deceased.

Preenay Sathu, Channel Head at FNB Financial Advisory, says “By law, the trustees of the retirement fund can override the wishes of the deceased; this is despite the fact that the deceased may have nominated beneficiaries of their choice. Retirement and provident funds are regulated by section 37C of the Pension Funds Act; this section gives the fund’s trustees the final say on how the death benefit is allocated among the beneficiaries. The trustees will be guided by the member’s wishes, but they will make the ultimate decision on who receives the benefit and who does not.”

“To avoid frustration, retirement fund members must update their beneficiaries on a regular basis, and ensure that all individuals that are financially depended on them are nominated. Upon death, fund trustees have up to 12 months to identify the dependents of the deceased. Should it be found that there’s an individual who is financially dependent on the deceased, that person can be allocated a death benefit even if they were not nominated”.

Furthermore any person listed as a beneficiary is not necessarily entitled to a payout; the trustees have a responsibility to consider the following:

·         Age of the nominee
·         Nature of relationship with the deceased member of the fund
·         Determine the extent to which the individual is dependent on the deceased
·         Financial standing of the individual – do they earn an income?
·         Consider their future earning potential

A common misconception is that if the fund member has his or her wishes stated in a will in relation to a fund death benefit, such desires will be followed. The trustees of the fund are not bound by the deceased member’s will.


“Retirement planning forms a large part of long-term financial planning; however, having plans in place is not enough. It’s also important to have a basic understanding of the regulations governing investment vehicles such as retirement funds, especially in the event of death. It is important that you work with a suitably qualified financial adviser to answer any questions and ensure that you have a very clear understanding of the impact of these regulations on your family,” adds Sathu

Comments

Popular posts from this blog

Grand Designs Live 2016 inspires Responsible Living In its seventh year, Grand Designs Live now brought to you by Black+Decker, has proven to be the leading contemporary home, design and garden show in South Africa. Every year legions of fans return to the event, inspired by its informative, innovative and interactive nature, and keen to learn about the latest trends, both locally and abroad.   And this year is going to be better than ever before because Media 10 is now running the show, and DIY king Black+Decker has come on board as title sponsor. Think of it as a fresh lick of paint, a move that will inject new, exciting energy into this incredible institution, keeping all the things you’ve fallen in love with over the years, but expanding the scope and experience. And what better way to kick off this new direction than by aligning this year’s theme with a cause that should be dear to all of us: Responsible Living. As conscious consumers it is now impe...
#UnfollowTheNorm this summer with smart and Zando Zando – South Africa’s leading ‘one-stop online shopping fashion store’ takes the latest high fashion runway trends and sources the best ready-to-wear collections, ensuring fashionistas have the latest fashion at their fingertips. Today on Zando users will find something a little out of ordinary, something much smarter and more useful than a new pair of high heels but still for much the same price.  Mercedes-Benz now introduces the new and funky smart forfour car directly onto the pages of Africa’s largest online retailer – a first for South Africa. Selvin Govender, Marketing Director of Mercedes-Benz cars says, “Our smart range of vehicles appeals to a trendier and more connected online audience, and introducing the new smart forfour to these digital natives in an online shopping environment, where they would least expect to be exposed to it, would be a unique experience.”  “More important...
  Comedy legend Barry Hilton unleashes Evolver on the Wild Coast South Africa’s elastic faced, king of clean comedy, Barry Hilton, brings his ultra funny, slick new production, Evolver , to Sun International’s Wild Coast Sun for a one night only show at on 12 May 2016. Fans can brace for hilarious comedy in true Hilton style.   The comedy legend, who launched his career at the Wild Coast Sun in the Jupiter Theatre in 1986, kicked off his 2016 Evolver Tour at Sibaya Casino and Entertainment Kingdom in February, leaving the crowd reeling with laughter at his tap-dancing mind, hilariously exaggerated facial expressions and all new material.   After 30 years of touring, six children, two ex-wives, a new wife, six dvds, two movies, Vegas, Cleese, Connolly, Monkhouse, millions of air miles and a Lifetime Achiever statue on his mantelpiece, Hilton is undoubtedly the quintessential South African comedy giant. Showing no signs of slowing down,...