The Pension Fund Adjudicator (“the Adjudicator”) set aside the board’s decision for failing to properly investigate dependency and for improperly deviating from the nomination form.
This determination is a crucial illustration of the fund’s duty to investigate dependency thoroughly, the need to properly weigh all section 37C factors and the principle that while boards are not bound by nomination forms, they must not ignore them without compelling justification.
Facts of the Complaint
The deceased passed away on 26 December 2022, leaving a death benefit of R560,160.00 to be distributed under section 37C of the Pension Funds Act (“the Act”). His customary spouse, the complainant, lodged a complaint after the board allocated 28% of the benefit to her and 28% to the deceased’s life partner, despite the complainant being the legal spouse and the deceased having nominated her to receive 80%.
The board also allocated a share of the death benefit to the deceased’s minor child and major children. The complainant’s dispute centred solely on the inclusion and allocation to the deceased’s life partner.
Board’s decision and allocation
- The Board allocated the death benefit as follows:
Complainant (customary spouse) – 28% - Minor child – 30%
- Life partner – 28%
- 6 major children – 2% each
The complainant argued that the deceased had nominated her to receive 80% of the death benefit and that the life partner was unknown to the family.
Evidence considered by the Fund
The fund explained that the life partner was included as a dependant because there was substantial evidence demonstrating a long‑term life partnership and financial dependency. The fund noted that the life partner and the deceased had been in a committed relationship since 2014, lived together and shared household expenses. They also relied on a 2019 lobola letter confirming that part of the lobola had been paid, as well as several affidavits from neighbours, family members, and friends attesting to the existence and nature of their relationship.
Additionally, the fund considered the life partner’s unemployment, lack of income, and her financial reliance on the deceased, as reflected in her receipt of a spouse’s pension of R6,612.19 from the fund. The deceased’s nomination form further supported her inclusion, as he had allocated 10% of his benefit to her in her capacity as a partner. In contrast, the fund indicated that the complainant and the major children were unable to provide evidence of financial dependency beyond affidavits, which carried less weight compared to the objective documentation supporting life partner’s dependency.
Findings of the Adjudicator
The Adjudicator stated that the fund failed to follow the beneficiary nomination and there must be good reason for a fund not to give effect to a nomination to justify its decision to deviate from the wishes of the deceased. The deceased completed the beneficiary nomination form in May 2022, shortly before his passing in December 2022.
The Adjudicator found that the deceased clearly intended to allocate 80% to the complainant and 10% to the life partner, mere months before his death. The Adjudicator stated that the board nevertheless allocated an equal portion of 28% to both women without compelling justification, therefore constituting an unreasonable deviation.
The Adjudicator emphasised that a fund bears an active duty to investigate and may not simply accept information provided by beneficiaries at face value. The Adjudicator further found that the board failed to properly weigh all relevant considerations, including the ages of the dependants, their respective earning capacities, the distinction between factual and legal dependency and the stated wishes of the deceased. The board also did not take into account the relatively small value of the death benefit or the fact that both spouses were already in receipt of a spouse’s pension. Consequently, the Adjudicator was of the view that the allocation was not based on a holistic assessment of the circumstances.
Ultimately, the Adjudicator held that the board had not exercised its discretion reasonably or lawfully. This was due to its failure to conduct a full investigation, its disregard of the deceased’s nomination form, its undue reliance on evidence provided by only one dependant, and its omission to consider all relevant factors required for a proper distribution decision.
The Adjudicator set aside the board’s allocation and directed the board to re‑exercise its discretion.
Article courtesy of :alexforbes
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