Section 37C of the Pension Funds Act (PFA) is crucial for ensuring the equitable distribution of pension benefits after a member's death. This provision seeks to balance the legitimate expectations of both known and unknown dependants of the deceased. How does Section 37C apply to various dependants, and what is its relationship with the deceased's testamentary intentions?
Under Section 37C, trustees of the Pension Fund are tasked with identifying and considering all dependants of the deceased member when allocating death benefits. This obligation extends to spouses, children, and other individuals who were financially and factually dependent on the deceased. The primary objective is to prevent certain dependants from being unjustly enriched at the expense of others while ensuring the deceased's financial responsibilities are honoured.
The trustees apply Section 37C using the following criteria:
- The ages of the beneficiaries
- Their relationship with the deceased
- The amount available for distribution
- The financial status of each beneficiary, including their future earning capacity
- The deceased's wishes
Trustees must carefully balance their statutory obligations under Section 37C with the testamentary wishes of the deceased. Where the will is clear and unambiguous, trustees may honour its provisions, provided they align with the fairness and reasonableness principles mandated by Section 37C.
In Sithole v ICS Provident Fund, the Pension Fund Adjudicator ruled that no single factor should be given more weight than others, highlighting that relevant factors depend on the specific circumstances of each case.
The case of Dobie NO v National Technikon Retirement Pension Fund provides further guidance, emphasising that the fund must distribute the benefit within 12 months of the member's death. However, the trustees have no obligation to pay until they have identified the beneficiaries and determined how the death benefit should be allocated. This ensures a just and equitable distribution of benefits and gives the fund time to trace all dependants.
Section 37C is a vital mechanism for ensuring that pension benefits are distributed equitably among both known and unknown dependants following a member's death. The law acknowledges the complexities of family relationships while respecting the testamentary wishes of the deceased. Trustees play a critical role in balancing these competing interests to achieve a fair and just distribution of benefits.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.