Who qualifies for death benefits?

Tshepo Dooka, Senior Assistant Adjudicator – Team Leader at The Office of the Pension Funds Adjudicator (OPFA)

A death benefit is a benefit that is payable to beneficiaries and/or nominees upon the death of a member of a fund or a pensioner. It is payable and computed in terms of fund rules.

For beneficiaries and/or nominees to qualify for death benefits, the deceased member must still be an active member of fund as at date of death.

Even though a death benefit is payable in terms of the rules, section 37C of the Pension Funds Act (“the Act”) governs the disposition of death benefits on the death of a member. The objective of section 37C of the Act is to ensure that persons who were dependent on the deceased member are not left destitute. It further overrides the deceased’s freedom of testation, and the board is not bound by the wishes of the deceased (in a Will or nomination form). The board of the fund must conduct an investigation to determine who the beneficiaries and/or nominees of the deceased are. It is important to note that a death benefit does not form part of the deceased’s estate.

The Act outlines three types of dependants:

Legal dependants: where there is a legal duty to support i.e. spouse, children, parents

Non-legal dependants: where there is no legal duty to support, however, the person was factually dependent on the deceased, spouse of the member- no statutory law recognising the marriage or union i.e. cohabitees, customary law spouse, same sex partners and children of the deceased i.e. posthumous child, an adopted child and a child born out of wedlock.

Future dependants: persons who would have become legally dependent on the deceased but for the death eg. parents who are likely to become indigent.

Nominees can be any persons nominated in writing by the deceased in his/her nomination form. However, they are not automatically entitled to a benefit by virtue of being nominated.

When allocating a death benefit, the board considers the following factors:

- The age of the dependants
- The nature of the relationship with the deceased
- Extent of dependency
- Financial circumstances of the beneficiaries
- The amount of the death benefit
- The wishes of the deceased

The most common documents in support of a death claim are as follows:

- Death, Birth and Marriage certificates
- A will or nomination form
- Cohabitation agreement
- Bank statements
- Distribution & liquidation account of estate
- A breakdown of financial position of beneficiaries
- Affidavits (Note: affidavits alone not sufficient if not supported by other evidence)

Where there are no dependants and/or nominees, the benefit can be paid into estate of the deceased. Where a member of the fund has exited the fund (eg. resignation), no death benefit shall be payable to his/her beneficiaries and/or nominees upon his death.