ConCourt rules on pension fund death benefits

IN A groundbreaking judgment regarding the distribution of death benefits, the Constitutional Court on Friday ruled 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 rand 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.

This application related to the equitable allocation and distribution of death benefits held within a pension fund. 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. Pension fund benefits provide much-needed assistance to those left vulnerable in the event of the death of their primary supporter.

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 his pension fund, the Municipal Gratuity Fund, claiming the death benefit of R1.6 million.