Constitutional Court rules on pension fund death benefits

IN A groundbreaking judgment regarding the distribution of death benefits, the Constitutional Court held that dependency must be assessed based on facts at the date of a member to a pension fund’s death, not at the time distribution decisions are made.

- ZELDA VENTER

Every year, South African retirement funds distribute billions of rands upon the death of their in-service members to persons who were “dependents” of a deceased member. These benefits are distributed in terms of section 37C of the Pension Funds Act.

The Constitutional Court noted that it is particularly important in the context of South Africa's high incidence of employment precariousness and dependency on a single breadwinner.

In this case, Tshifhiwa Mutsila’s husband died in 2012 of work-related injuries. She was left to care for herself and their five children. She filed a claim with her pension fund, the Municipal Gratuity Fund, claiming the death benefit of R1.6 million.