Advantages of nominating a beneficiary
Dependants get preference over non-dependant beneficiaries, which means that the death benefit from your retirement fund won’t necessarily be distributed as specified on your nomination.
Access the comprehensive guide to the retirement death claims process and do these three things now to ease the burden on your loved ones when you pass away:
- Ensure you have a valid Will.
- Nominate your beneficiaries.
- Let a family member know where to access important paperwork and your passwords.
How to nominate a retirement fund beneficiary
As you probably know, a beneficiary is a person you nominate to receive all or a percentage of your benefit in your retirement funds. You can only nominate a person as a beneficiary on your retirement fund, not a charity, church, business, or your estate.
Case study 1
In a recent case study, a depressed retirement fund member nominated a church as the beneficiary of her fund benefit just before her death. Because the church is not a person, the nomination was not valid. Her fund benefit ended up in her estate, which meant it was subject to the executor’s fees. Usually, retirement benefits are not part of a deceased member’s estate assets, and no executor’s fees are payable. On top of that, as she had no will and her only relative didn’t want her pension benefit, the benefit ended up in the government’s Guardian’s Fund.
You can nominate one or more persons. Beneficiaries should include your spouse or partner, your children, any person financially dependent on you (a parent or sometimes even your domestic worker) or any person you want to receive a part of your benefit.
Importance of nominating a beneficiary
The Pension Funds Act states that your dependants get preference over non-dependant beneficiaries. This means the death benefit from your retirement fund will not necessarily be paid as you have specified. Why bother to nominate then, you may ask? It is still important to indicate who you want as your beneficiaries, as the trustees of your fund will place great weight on that. The law is intact to protect vulnerable people that may be overseen. Learn more about 10 things to know about the retirement fund death claims process.
When to update your beneficiary
After every major life event, such as getting married, the birth of a child, getting divorced, or if one of your nominated beneficiaries passed away, it is essential to update your beneficiary nomination and ensure we have your beneficiaries’ contact details. You should also revisit your nomination on each contract when you update your Will.
Case study 2
In another recent case study, an estranged husband never divorced his wife. When she fell pregnant in a second relationship, he filed for divorce but died before he could sign the papers. She was not dependent on him financially, but as the member didn’t have any children or other dependants and didn’t nominate a beneficiary, the estranged wife received his pension benefit as she was the only legal dependant. Up-to-date beneficiary details avoid mistakes, make the allocation of your fund benefit easier, and help along the administration when you die.
How to update your beneficiaries
When you nominate, you must specify the following:
- The full names of the persons.
- Their dates of birth.
- Your relationship with them.
- Any contact details.
- What percentage you would like to leave to each.
Investo clients can update their beneficiaries on momentum.co.za without contacting the service centre. They can log in, and select Investments and Savings, on their Investo product and then on Beneficiaries. Their financial advisers can update it, too.
Wealth clients can update their beneficiaries by contacting their financial advisers.
Nominations save a lot of time, money and hassles, and your loved ones will only thank you for your diligence in keeping your nominations updated.
Get financial advice
Take charge and ensure you receive a monthly income to maintain the life you've become accustomed to well into retirement.
We recommend that you get in touch with your financial adviser to plan for your retirement together. South African retirement funds must also give their members access to retirement benefit counselling when they are close to retirement and at retirement.
Select the “Find an adviser” button below if you don't have a financial adviser or speak to our retirement benefit counsellors on 0860 546 533.
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