Nomination form is only a guide when paying death benefits

11 August 2020 Pension Funds Adjudicator
Advocate Matome Thulare, Deputy Pension Funds Adjudicator

Advocate Matome Thulare, Deputy Pension Funds Adjudicator

A nomination form does not automatically qualify those nominated to receive a death benefit but merely acts as a guide to the board of a fund, says Deputy Pension Funds Adjudicator, Advocate Matome Thulare.

He was commenting in a matter in which the complainant objected to not receiving a death benefit which, she claimed, should have been paid to her husband who was the deceased’s brother.

Since her husband had passed away, she said the death benefit should have been paid to her and her minor children. Instead, the benefit was paid to the deceased’s six other siblings.

The complainant is the sister-in-law of the deceased who passed away on 23 September 2014. The deceased was employed by Emfuleni Local Municipality at the time of her demise. She was a member of the Municipal Gratuity Fund, administered by Sanlam Employee Benefits (Pty) Ltd.

Following the deceased’s demise, a death benefit in the amount of R1 280 307.54 became available for distribution to her beneficiaries and dependants.

At the time of her death, the deceased was survived by seven siblings including the husband of the complainant.

On 1 December 2014, the complainant’s husband completed an application for death benefit form in respect of the deceased’s death benefit. In the application form, he did not declare any financial dependency on the deceased.

On 30 December 2014, the complainant’s husband died of natural causes. On 18 May 2016, the board of the first respondent resolved to allocate the deceased’s death benefit to the siblings that were still alive at the time of its decision.

The complainant was aggrieved with the allocation of the death benefit in the amount of R1 059 014.90 (following deduction of tax and the home loan) to the deceased’s siblings, to the exclusion of her and her minor children.

The complainant submitted that prior to his death, her husband visited the deceased’s employer’s office at the request of a senior HR official for the purpose of claiming the death benefit. She submitted that the application form for the death benefit was accompanied by a nomination form that indicated that her husband was nominated as the 100% beneficiary of the deceased’s death benefit.

Although the nomination form did not appear with the application form annexed to the complaint, the complainant submitted that the markings in manuscript on the complaint form indicated “Yes” to the nomination form being attached. The complainant submitted that this was completed by the HR officer.

The complainant submitted that the second respondent accepted the death claim documents without requesting further information in respect of her husband’s financial dependency on the deceased and that as a result her husband was prejudiced by not being afforded an opportunity to respond to his non-declaration of dependency.

The first respondent confirmed there was no record of a nomination form with both the employer and the second respondent.

The first respondent averred that on 18 October 2018, the complainant deposed to an affidavit wherein she confirmed the existence of a nomination form. It indicated that the complainant admitted at a meeting held on 23 January 2019, in the presence of 15 other attendees, that she never saw a completed nomination form on file at the employer or elsewhere.

The first respondent confirmed that the application form submitted by the complainant’s husband was accepted, however, such acceptance did not necessarily mean the applicant became a qualified dependant of the deceased.

The first respondent also submitted that the complainant had made allegations of fraud and forgery at various stages in which shed attacked the integrity of the first and second respondent’s officials. However, at no stage were these allegations substantiated with any evidence.

In his determination, Advocate Thulare said the payment of a death benefit is regulated in terms of section 37C of the Pension Funds Act.

It is the board’s responsibility when dealing with the payment of death benefits to conduct a thorough investigation to determine the beneficiaries. The following factors must be considered: the age of the dependants; the relationship with the deceased; the extent of dependency; the wishes of the deceased; and the financial affairs of the dependants including their future earning capacity potential.

Advocate Thulare said the complainant’s husband could not have qualified as a dependant since he had already passed away before the decision and distribution in respect of the deceased’s death benefit had taken place.

“The complainant alleges that the deceased nominated her husband as her sole beneficiary. The complainant does not allege that either she or her two children were nominated as beneficiaries nor does she allege that they were factually dependent on the deceased, yet the relief she seeks is that 100% of the death benefit should be paid to her and her two children.

“The relief that the complainant seeks cannot be sustained by the law or the facts. The complainant is clearly mistaken about the nature of her entitlement as it is premised on the wrong legal basis.

“It is clear that the complainant believes that if there is a nomination form nominating her deceased spouse as the sole beneficiary then this automatically qualifies her and her two children to receive the benefit for which her deceased spouse was nominated. This is in fact not the case.
“A nomination form is not binding and acts merely as a guide to the board of a fund. The first respondent was not required to strictly adhere to the provisions of the nomination form for to do so would have resulted in it fettering its discretion.”

Advocate Thulare said at the time the board took its decision with regard to distribution of the death benefit, the complainant’s husband had already passed away. Further, he had declared that he was not financially dependent on the deceased.

There were six other siblings of the deceased who qualified as factual dependants, having been financially dependent on the deceased during her lifetime. Based on that scenario, the board could not have allocated 100% of the benefit to the complainant and her two children, who did not qualify as beneficiaries of the deceased.

“The complainant’s belief that she would have been entitled to the relief she seeks if the nomination form was produced is thus unfounded,” said Advocate Thulare whilst dismissing the complaint.

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