Who gets your pension when you die? Your nomination form isn't final

Your retirement fund, not your nomination form, decides who gets your death benefit. A High Court ruling in Pretoria has now made clear that the fund must back every share it hands out with checked evidence, not guesswork.

The court dismissed the Telkom Retirement Fund's bid to overturn a Pension Funds Adjudicator ruling about a R7.68 million death benefit, IOL reported on 27 October. The fund must now look again at the R768,407 it gave the late member's mother.

What happened in the Telkom case?

A Telkom employee died on 22 October 2022 and left a death benefit of R7,684,069.95. He had not filled in a beneficiary nomination form, according to Conviction.

The fund found four dependants and split the money this way, IOL reported:

• 50% to his wife
• 20% each to his two minor children
• 10% to his 77-year-old mother (R768,407 before tax, R633,137.32 after tax)

His widow complained to the Pension Funds Adjudicator, which set the mother's share aside twice and ordered a fresh investigation. The fund then went to court.

Why did the court side with the widow?

Acting Judge Van der Merwe found the fund had relied on unverified information and speculation, according to IOL. The mother had about R15,475 a month in pension income against R14,998 in expenses. The fund argued she might one day need frail care at about R20,000 a month, but it had no medical evidence and no actuarial or capital-needs calculation to support that.

The fund also accepted a relative's word that he could not support her without checking his finances, and did not look at whether her late husband's estate could help, the court found.

The judge accepted that the mother could still count as a future dependant. But the amount had to be rationally linked to her likely needs. The court refused to set a new percentage itself and sent the matter back to the fund, which must also pay the widow's legal costs, IOL reported.

Who counts as a dependant under the law?

The Pension Funds Act lists three groups:

• people you are legally obliged to maintain
• people who were in fact dependent on you when you died, plus your spouse and children (including adopted children and children born outside marriage), even if you were not legally liable to support them
• people you would have become legally liable to maintain had you not died

Does my nomination form count at all?

Yes, but it is a guide. Under section 37C, death benefits from a retirement fund do not go into your estate. If the fund finds dependants within 12 months of your death, it must pay them in shares it considers fair. Where you have both dependants and nominees, the board can split the money between them in whatever proportions it considers fair.

A nominee who is not a dependant gets paid in full only if the fund finds no dependants within those 12 months. The Pension Funds Adjudicator has said the same in past rulings: the nomination form is a guideline, and the fund must investigate each dependant's needs before deciding.

Keeping your form up to date still helps. It tells the trustees who you want to look after and points them to people they might otherwise miss.

What can I do if I think a payout is unfair?

First complain in writing to the fund. It has 30 days to respond, according to the Adjudicator's rules.

If you are not happy with the answer, lodge a complaint with the Office of the Pension Funds Adjudicator. It is free. Call 080 074 4444 or email [email protected]. Some funds, including the Government Employees Pension Fund (GEPF), handle complaints through their own process, and the Adjudicator's site lists them.