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Understanding what happens when a loved one dies

30 Aug 2017

​Pay-outs follow fund rules and the law

A death of a family member is always heart-breaking and leaves the surviving spouse, dependants and other family members in a difficult state. Many families are often not aware of the procedures to follow.

Section 37C of the Pensions Funds Act governs the payment of the member's lump sum benefits, provident fund and other retirement annuity funds to beneficiaries should the member pass away while still in service of the employer. These benefits are payable in terms of the fund rules. The act outlines the steps to be taken into account by the fund trustees regarding the identification of beneficiaries, the allocation and distribution of benefits, the factors to be considered when determining the extent of beneficiaries' dependency as well as the period of the payment of the benefits.

Payments of benefits to dependants and/or nominees

The act provides that upon death of the member, the employer and the fund are required to identify dependants within 12 months. The fund should pay the said benefits as deemed equitable to one such dependant or in form of proportions if there is more than one dependant.

It is important for employees to complete and update their nomination forms regularly in order to assist trustees in being able to identify beneficiaries. However, the distribution of the benefits will be strictly in line with Section 37C of the act and the fund rules. This is to ensure the deceased member's legal dependants and other beneficiaries receive the fair allocation of benefits.

Payments of benefits to dependants

In terms of the act, a dependant in relation to a member includes but is not limited to a spouse, a child (biological, adopted or stepchildren) and any other person who was dependent on the member for maintenance prior to death, or any other persons whom the member would have become legally liable for maintenance had the member not died.

The trustees are required, within 12 months of death to establish the dependant(s) and distribute the benefits. The trustees should take into account various factors, including:

  • The ages of the beneficiaries;
  • The relationship of the beneficiaries with the deceased prior to death;
  • The financial status and extent of dependency on the deceased; and
  • The future earning capacities of the beneficiaries.

Payments of benefits to nominees

Where within 12 months of the death, the dependants are still not established or traced; the fund can go ahead in paying the funds to the nominees as nominated by the member in writing prior to death. The benefits will be paid out to the nominated individuals in the manner and proportions as specified on the written nomination.

It is important to note that where none of the member's dependants cannot be identified and the member had not elected any nominee in writing, the funds will be payable to the Guardian's Fund or unclaimed benefit fund.

To find out more about your pension or retirement options with your employer, contact Liberty Corporate on +27 11 408 2999 or email us at

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Liberty Group Limited (Reg. no 1957/002788/06) is a licensed Insurer and an Authorised Financial Services Provider (no 2409).