In the matter of T v University of KwaZulu-Natal Pension Fund (the Fund) and ABSA Consultants & Actuaries (the Administrator), the Pension Funds Adjudicator (the Adjudicator) dealt with the extent of investigations to be done by trustees in the distribution of a death benefit.
In their final resolution, the trustees of the Fund allocated the entire death benefit to R, the deceased’s mother, to the exclusion of the complainant, who was named as a nominee on the beneficiary form.
The basis of the complaint was the fact that the complainant, who was the deceased’s friend, was the sole nominee in terms of a beneficiary nomination form signed by the deceased prior to his death. The complainant argued that the trustees should have respected the wishes of the deceased and allocated the death benefit to him.
He pointed out the period of time that he had been friends with the deceased, and that he took care of the deceased when he was ill and that the deceased had named him as next of kin when the deceased was hospitalised. During the investigation the complainant further stated he was the deceased’s partner.
The complainant stated that R was not a dependent of the deceased and should not have been allocated any share of the death benefit. He requested the Adjudicator to reverse the allocation made to R.
The trustees’ response
In their response to the complaint the trustees stated that the
investigations conducted in terms of Section 37C of the Act, by the
trustees, found that the deceased had completed a beneficiary
nomination form wherein the complainant was the sole nominee.
Their investigation also showed that the deceased was not married
and did not have any children, and they noted that the complainant
had informed the employer that he was the deceased’s partner.
Upon interviewing close friends and family, it was established that the complainant was not the deceased’s partner and did not live with the deceased. R informed the trustees that the complainant lived with someone else in Gauteng and the deceased lived in KwaZulu-Natal.
It was also established that the complainant was not financially dependent on the deceased and did not rely on him for any support.
An important point noted by the trustees was the fact that the complainant had failed to prove that he was the deceased’s partner and so he did not qualify to receive the spouse’s benefit in terms of the rules of the Fund.
While the trustees considered the beneficiary form completed by the deceased, they noted that they were not bound by it. The trustees resolved not to allocate a share of the deceased’s death benefit to the complainant as he had failed to prove a relationship of mutual dependence on the deceased and did not live with the deceased.
The trustees also considered that the deceased was survived by two siblings, and his mother R who resided in an old age home and is in poor health.
The trustees based their allocation to R on the following:
- The definition of a dependent in terms of the Act and found that the objective of Section 37C was to ensure that all those who were dependent on the deceased member are not left destitute when he/she dies
- From the interviews and statements obtained, R would have been dependent on the deceased had he not died as a result of the rising costs of health care, and that her savings were running out
- R does not have any future earning potential
- The deceased’s siblings live overseas and had their own families to take care of
The Adjudicator’s determination
In her determination, the Adjudicator stated the issue to be determined, was whether or not the trustees considered all the relevant factors when distributing the deceased’s death benefit.
When making an “equitable distribution” among dependents, the trustees have to consider the following:
- The age of the dependents
- The relationship with the deceased
- The extent of dependency
- The wishes of the deceased placed in either a will and/or nomination form
- The financial affairs of the dependents including their future earning capital
The Adjudicator rejected the complainant’s argument that R was not a dependent of the deceased. The Adjudicator considered that R could not take care of herself and would have resorted to the deceased for support and, as a result, was a dependent of the deceased in terms of the Act.
The Adjudicator reiterated that the trustees were not bound to follow the deceased’s wishes in terms of the beneficiary nomination form wherein the complainant was noted as the sole nominee.
The Adjudicator agreed that the objective of Section 37C is to ensure that all those who were financially dependent on the deceased member are not left destitute when he/she dies, however, the Adjudicator found that this matter was unique as the complainant was a nominee and did not have to prove financial dependency on the deceased nor was there a duty placed on him to prove that he had a relationship with the deceased in order to be allocated a share of the death benefit, contrary to the Fund’s argument above.
The Adjudicator found that it may have been as a result of the trustees questions which led the complainant to believe that he had to “concoct unnecessary tales of his dependence” on the deceased.
The Adjudicator found that the trustees failed to prove that R was financially dependent on the deceased during his lifetime, that the trustees had also failed to submit any evidence relating to R’s current savings and the tools used to determine that she may not be able to take care of herself in future. Therefore the Adjudicator held that the findings made by the trustees into R’s financial affairs were purely speculative.
The Adjudicator also noted her concern with the failure by the trustees to consider R’s other children’s responsibility to care for their mother should she experience any financial problems, despite them having their own families to look after. The Adjudicator held that the trustees had failed to investigate whether or not the children would be able to fulfil this responsibility.
The Adjudicator stated that all the siblings shared an equal duty to care for R and the trustees’ reasoning in this matter was flawed (ie, the trustees had considered that the deceased did not have children and his siblings had their own families to take care of).
As a result, the Adjudicator ordered the trustees to re-exercise its discretion in terms of Section 37C of the Act.
This article was first published in Glassock Guidelines, Edition 7. This publication does not provide advice. If you have any questions/comments on the above, please contact your consultant.