The status of nomination forms and wills when retirement funds' death benefits are distributed

Abstract

This paper discusses the importance of deceased retirement fund members nominating their preferred beneficiaries to receive their accumulated retirement benefits when they die. It assesses whether nominations made by deceased members through nomination forms (and at times wills) are binding on retirement funds boards when distributing death benefits. It further assesses whether nominated beneficiaries are entitled to be allocated the available death benefits. Most importantly, this paper highlights the inherent weakness in section 37C of the Pension Funds Act 24 of 1956 regarding the treatment of nominated beneficiaries. It demonstrates that these beneficiaries are often requested to prove financial dependency despite this provision being silent on the issue. It illustrates further that the nominated beneficiaries' entitlement to be considered and allocated death benefits does not arise from financial dependency but from the act of nomination. It argues that there is no mechanism that retirement funds' boards can utilise to determine what should be allocated to the nominated beneficiaries. Furthermore, this paper argues that section 37 of the PFA is constitutional.