Retirement fund death claims process
The distribution of retirement fund death benefits is governed by section 37C of the Pension Funds Act (the Act). The Board of Trustees (Trustees) of the fund must investigate and gather information they will rely on to decide how the benefit must be distributed, after considering several factors.
Below is a list of 10 things to know about the death claims process and a short case study of a death benefit distribution.
Ten things to know
How we decide: An example
Case study 1
The deceased member was a 49-year-old male who died in November 2019. The death claim value available for distribution R54 000. The deceased member received an annual income of R690 000 and did not have a Last Will and Testament. The fund found six potential beneficiaries and was provided with the following information for each of them as at the date of the member’s death:
- A 45-year-old unemployed surviving spouse: married to the deceased member since 2008.
- A 20-year-old son: the member’s son from a previous relationship who did not live with the deceased member and was a second-year student. The deceased member paid for his studies.
- A 17-year-old daughter: the member’s daughter from a previous relationship who did not live with the deceased member and was a grade 11 learner. The deceased member paid R500 a month maintenance.
- A 10-year-old daughter: the member’s daughter with the surviving spouse who was a grade 6 learner.
- A 6-year-old son: the member’s son with the surviving spouse who lived with the deceased member and was a grade 1 learner.
- A 1-year-old son, the member’s son with the surviving spouse who lived with the deceased member.
Case study 2
The deceased member was a 49-year-old male who died in November 2019. The death claim value available for distribution was R1 400 000 The deceased member received an annual income of R690 000. He left his entire estate, worth R2 000 000, to his surviving spouse. The fund found six potential beneficiaries and was provided with the following information for each of them as at the date of the member’s death:
- A 45-year-old surviving spouse: married to the deceased member since 2008 and was employed, earning an annual income of R600 000.
- A 20-year-old son: the member’s son from a previous relationship who did not live with the deceased member and was a second-year student. The deceased member paid for his studies.
- A 17-year-old daughter: the member’s daughter from a previous relationship who did not live with the deceased member and was a grade 11 learner. The deceased member paid R500 a month maintenance.
- A 10-year-old daughter: the member’s daughter with the surviving spouse who was a grade 6 learner.
- A 6-year-old son: the member’s son with the surviving spouse who lived with the deceased member and was a grade 1 learner.
- A 1-year-old son, the member’s son with the surviving spouse who lived with the deceased member.
The benefit was allocated as follows
This case shows that certain factors such as the value of the benefit, ages and employment status were considered in deciding the allocation of the benefit. It also shows how the different factors can lead to a different allocation. Each death claim is assessed by the trustees based on its
own merits.
Case study 1
- The potential beneficiaries all qualify as the deceased member’s dependants.
- As the spouse was unemployed, their household lost its only source of income when the member died.
- Considering the small value of the benefit that is available for distribution and the three minor children the spouse must look after, the Trustees decided to allocate 100% of the benefit to the spouse.
- The benefit is too small to consider paying anything to the major son of 20, who is able to find employment.
Case study 2
- The 45-year-old surviving spouse: the Trustees considered her salary, the amount she received from the estate and her age. They allocated 12% of the benefit to her.
- The 20-year-old son: the Trustees considered his age and that his studies were funded by the deceased member. They allocated 1% of the benefit to him.
- The 17-year-old daughter: the Trustees considered her age, that she is a scholar who will complete her tertiary education and the maintenance that the deceased member paid. They allocated 1% of the benefit to her.
- The 10-year-old daughter: the Trustees considered her age, that she is a scholar who will complete her schooling and tertiary education and that she lived with the deceased member. They allocated 24% of the benefit to her.
- The 6-year-old son: the Trustees considered his age, that he is a scholar who will complete his schooling and tertiary education and that he lived with the deceased member. They allocated 28% of the benefit to him.
- The 1-year-old son: the Trustees considered his age, that he still has to go to school to complete his schooling and tertiary education, and that he lived with the deceased member. They allocated 34% of the benefit to him.
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