The deceased's sister and her two children challenged the fund's decision to award 45% of the death benefit to a woman recognised as his life partner.
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The Pension Funds Adjudicator has dismissed a complaint by the sister of a deceased pension fund member over the distribution of his R8.3 million death benefit.
The ruling upheld the trustees’ decision to allocate 45% of the benefit to the sister and 45% to the member’s permanent life partner.
The adjudicator’s conclusion endorses Section 37C of the Pension Funds Act, which states that death benefits must be distributed equitably among dependants, regardless of beneficiary nominations or wills.
For example, under this section, the retirement fund trustees may decide to allocate most or all of the death benefit to a deceased member’s spouse and children because they are dependants.
The nominee is therefore not automatically entitled to receive the benefit simply because they were nominated or named in the will or beneficiary nomination form.
Distribution of death benefit
The ruling followed a dispute over the death benefit of a member of the Corporate Selection Umbrella Retirement Fund who died in May 2024.
The deceased’s sister and her two children challenged the fund’s decision to recognise a woman identified only as ‘M’ as his permanent life partner and allocate 45% of the benefit to the life partner and the sister.
The remaining 10% of the benefit was shared equally between the deceased’s niece and nephew.
The complainants argued that the deceased had nominated his sister to receive 100% of the benefit in 2005 and that ‘M’ did not qualify as a permanent life partner.
They also alleged that the trustees failed to provide full reasons for their decision, disclose evidence or properly consider competing versions.
Life partner, or not?
The fund maintained that ‘M’ had been in a relationship with the deceased for about 20 years, that they had cohabited from July 2023 until his death at his residence in Sandton in Johannesburg, and that he provided her with consistent financial support.
Witnesses also described the deceased and ‘M’ as being in a romantic relationship, while his employer and even the Rabbi at his funeral referred to her as his “life partner”.
The fund argued that even though the sister was a factual dependant, ‘M’ qualified as a legal dependant under the amended definition of “spouse”, which includes permanent life partners.
The deceased’s sister however contended that the deceased and ‘M’ had not cohabitated and maintained two separate residences as well as separate bank accounts. She also relied on statements from acquaintances who had denied the couple had been in a romantic relationship.
The ruling
In his determination, Pension Funds Adjudicator Lebogang Mogashoa found that the deceased’s nomination of his sister, though relevant, did not have to be followed by the fund under Section 37C.
“Trustees must distribute benefits equitably among dependants, regardless of nominations or wills,” he said.
Addressing the complainants’ contention that ‘M’ could not be recognised as the deceased’s permanent life partner because they maintained separate residences, Mogashoa said the argument was “misplaced”.
“Our law recognises that many marriages, unions, and permanent life partnerships in South Africa do not involve continuous co-residence, often due to economic, employment, or personal circumstances. Such arrangements do not, without more, negate the existence of a permanent life partnership.
“What is required is proof of a permanent conjugal relationship, coupled with steps evidencing an intention to share their lives together. Such steps may include plans to formalise the relationship through marriage or civil union.”
He said the Constitutional Court had identified several factors relevant to determining the existence of a permanent life partnership, including the duration of the relationship, whether the parties shared a common abode, shared expenses, financial support, how family and friends perceived the relationship, provision for one another in pension and related benefits, and whether they publicly associated as an intimate couple.
“The law thus rejects rigid or formalistic requirements,” Mogashoa said.
“Continuous cohabitation is not essential, nor is the existence of joint financial accounts. Financial dependency may be established through indirect forms of support. The inquiry is fact-specific and must be resolved on the probabilities.”
The adjudicator found that although the complainants had raised concerns about disclosure and the trustees’ reasoning, the board had conducted the necessary investigations, considered the submissions before it, and exercised its discretion in accordance with the law.
He concluded that the board’s finding that ‘M’ qualified as a permanent life partner “was supported by multiple corroborating sources of evidence, and not by a single unsubstantiated allegation”.
He subsequently upheld the fund’s benefit allocation and dismissed the complaint.
This article was republished from Moneyweb. Read the original here.
