The court dealt with this question in Ndwandwe v Trustees of Transnet Retirement Fund and Others [2023] ZAKZDHC 8 (22 February 2023) of Transnet Retirement Fund and Others [2023] ZAKZDHC 8 (22 February 2023).
The conclusion
was that the trustees of a fund may apportion death benefits to the member’s
nominees as well as identified dependents and beneficiaries who are not
included in the nomination form, subject to the wording of its rules.
Ndwandwe (the deceased)
worked for Transnet. When he died, he was survived by two wives and 10 children.
Years before
his death the deceased completed a beneficiary nomination form, nominating certain
family members. Retirement funds rules are the main source of the rights and
obligations that regulate the relationship between the fund on one hand, and
its members and the employer, on the other. The board of trustees of a fund are
therefore guided by the rules of that fund.
Notwithstanding
the nominees and percentages stipulated by the deceased in the nomination form,
the trustees deviated from the nominations. Mrs Ndwandwe was unhappy with the
change and approached the court, seeking to set aside the revised apportionment
by the trustees of the fund. She contended that the trustees committed a
reviewable irregularity by ignoring the contents and stipulations in the
deceased’s nomination form.
The trustees
of the fund argued that it was not bound by the nomination form and was
entitled to make an independent apportionment of the deceased’s death benefit
to his qualifying dependents as defined in terms of the fund’s rules.
The court found
that the trustees acted reasonably and rationally in arriving at the decision to
vary the proportions of the death benefits amongst the deceased’s dependants, contrary
to the express wishes of the deceased, stipulated in his nomination form.
It found that the
trustees of the fund had a large discretion to determine, in the light of its
assessment of their respective needs, in what proportions the death benefit of
the deceased would be distributed among his dependants.
This judgment
accords with the prevailing law set out in section 37C of the Pension Funds Act
24 of 1956 (PFA). The PFA empowers a board of trustees to take all reasonable
steps to identify and locate all potential dependents and beneficiaries of the
deceased member’s death benefits and to distribute the benefits in a rational
and equitable manner. The board of trustees is therefore not bound to rely
solely on the information that is brought to its attention through a member’s
nomination form.
