The issue before the court was who a pension fund
must pay the death benefits to. In a beneficiary nomination form, the deceased nominated
only his mother
and his daughter. The guardian of the child (Tsele, the complainant) objected to
the fact that the pension fund administrators ignored the wishes of the
deceased and appointed his brothers as additional beneficiaries.
The Pension
Funds Adjudicator was called upon to make this decision in Tsele v Bidvest South Africa Retirement Fund
and another, before the Pension
Funds Tribunal.
Mini Summary:
The payment of a death benefit was at the centre
of the present complaint to the Pension Funds Adjudicator. The complainant was
the mother of a child fathered by a member of the Bidvest’s pension fund. Upon
the death of the member, the fund decided to allocate the death benefit payable
amongst the two brothers of the deceased, and the complainant’s child.
According to the complainant, the only nominated
beneficiaries of the deceased were his mother and his daughter. The complainant
contended that as the deceased’s mother had died, the deceased’s daughter
should be his only beneficiary. She also complained that despite her having
informed the fund that the brothers of the deceased had successful careers, the
fund failed to investigate that.
Held that the
issue to be determined was whether or not the board of management of the first
respondent carried out its duties in terms of section 37C of the Pension Funds
Act 24 of 1956.
Section 37C of the act governs the disposition
of death benefits. It places a duty on the board of management to identify the
beneficiaries of a deceased member and also vests the board with discretionary
powers on the proportions and manner of distributing the proceeds of a death
benefit. As with the exercise of any discretionary power, in effecting an
equitable distribution the board is required to give proper consideration to
relevant factors and exclude irrelevant ones from consideration. The board of
management may not unduly fetter its discretion by following a rigid policy
that takes no account of the personal circumstances of each beneficiary and of
the prevailing situation. When making an “equitable distribution” amongst
dependants the board of management has to consider the age of the dependants; the
relationship with the deceased; the extent of dependency; the wishes of the
deceased placed either in the nomination form and / or his last will; and the
financial affairs of the dependants including their future earning capacity
potential.
Although the deceased completed a beneficiary
nomination form, the nomination form serves merely as a guide to assist the
board in the exercise of its discretion. The fund’s task in distributing a
death benefit in terms of section 37C of the act is to identify all the
potential beneficiaries. The board is vested with discretionary powers to
decide on an equitable distribution of the death benefit. It is only in cases
where it has exercised its powers unreasonably and improperly or unduly
fettered the exercise thereof, that its decision can be reviewed.
The adjudicator found that the board of the fund
erred in relying solely on affidavits provided by the deceased’s brothers,
stating that they were unemployed. The fund fell short of complying with its
duty to conduct a proper investigation, and its decision was set aside.
