A woman whom her deceased friend had designated as the recipient of the entire insurance benefit, exceeding R2.64 million, failed in her attempt to overturn the decision that allocated 40% of the benefit to the deceased's sister, who has intellectual disabilities.
The Pension Funds Arbitrator dismissed the complaint filed by HP. She challenged the decision of the Ninety One Retirement Annuity Fund, which allocated 60% of the benefit to her and 40% to Debre de Jager, the late member's sister.
The dispute arose after the death of CA in August 2022, making the benefit of over R2.6 million available for distribution. Initially, the fund awarded the entire sum to HP, but the Pension Funds Arbitrator overturned this decision in January 2025 after CA's sister, DB, lodged a complaint. She argued that the fund had not conducted due diligence regarding her financial dependence on the deceased.
Following the previous ruling, the fund conducted a new investigation and concluded that DB should receive 40% of the benefit, and HP the remaining 60%. HP, who lived with the deceased since 2005, insisted that she was named the sole beneficiary in the will and beneficiary nomination. She claimed that she covered most of the household expenses for many years due to the deceased's reduced income, and also provided financial support to the deceased's parents.
Furthermore, she argued that DB, who moved into the house in 2018, is financially independent due to SASSA old age benefits, pension income, and inheritance. According to HP, DB only received limited assistance with incidental expenses, and living and food in the shared home did not meet the criteria for financial dependency under the Pension Funds Act.
HP also told the arbitrator that she had already paid DB R700,000 in December 2024, and insisted that this amount should be deducted from DB's share if the distribution were upheld. She accused the fund of conducting an inadequate investigation, failing to obtain financial records, and reaching an erroneous conclusion about the sister's financial dependence on the deceased.
The pension fund defended its decision, stating that it followed the previous determination after conducting a thorough investigation. The fund found that while HP paid for most of the household expenses, DB was dependent on both the deceased and HP for housing, food, and basic needs. The fund also determined that DB suffers from moderate intellectual impairment requiring daily assistance and would likely require supported living in the future. Despite DB receiving income from pensions, social grants, and investments, the fund concluded that her existing resources would not adequately cover future care and living expenses.
In considering the complaint, the arbitrator noted that the central issue was whether the fund had properly used its discretion in determining what it considered a fair distribution of the death benefit. The ruling confirmed that the purpose of the Pension Funds Act is to protect individuals who were financially dependent on the deceased member, not merely to execute the deceased's nomination. The arbitrator noted that while beneficiary nominations are relevant, they serve only as guidance and cannot override the board's obligation to ensure a fair distribution after considering all relevant factors.
The arbitrator also rejected HP's argument that DB was never dependent on the deceased. He found that HP's own statements showed that three women lived together and contributed to the household according to their abilities, confirming an interdependence where DB relied on the deceased for housing and other support. Furthermore, the arbitrator ruled that HP was not entitled to participate in the percentages added to DB's share. He accepted the fund's explanation that the percentages simply placed DB in the position she would have been in had she been included in the initial distribution, and allowing HP to participate in these percentages would unfairly enrich her. Ultimately, the arbitrator found no evidence that the fund had ignored relevant considerations or improperly exercised its discretion.
The sister, who was designated by the late brother to receive a life insurance benefit of over 1.93 million rands, expressed dissatisfaction with the fact that her nephew received a significant portion of the father's death benefit.
The dispute arose after LP passed away in October 2023, leaving a death benefit of 654,693.82 rands to be distributed. The fund allocated 80% (over 523,000 rands) to the deceased's son, S, and 20% (over 130,000 rands) to the deceased's mother, EM. Meanwhile, the deceased's sister, RK, received nothing.
RK challenged this distribution, arguing that S was not financially dependent on the deceased, and stated that her deceased brother denied paternity of the child. DNA tests were conducted, the results of which confirmed the biological link between the boy, who was three years old at the time of his father's death, and the deceased.
Dissatisfied with the outcome, RK insisted that her elderly mother, a pensioner completely dependent on the deceased for daily expenses, deserved a much larger share of the benefit than the 20% she received. Furthermore, she demanded reimbursement for funeral expenses incurred for her brother.
However, the pension fund objected, pointing out that RK was the sole beneficiary of the brother's life insurance benefit amounting to 1,934,910.72 rands. The fund explained that neither S nor the deceased's mother received payments from this insurance, so the fund was forced to distribute the pension fund's death benefit exclusively between the child and the mother.
The deceased's mother, EM, confirmed that she lived with her son until his death and relied on him for food, housing, transportation, utilities, and medical expenses. She claimed to be completely dependent on him and believed that the distribution unfairly favored S, who was only partially dependent through maintenance payments.
Meanwhile, S's mother disputed RK's claims, stating that the deceased had acknowledged paternity during the alimony lawsuit, which led to a court ruling obligating him to pay 500 rands monthly for the child's upkeep. She also reported that her son has speech delays requiring therapy and additional treatment.
In its decision, the deputy adjudicator of the pension funds, Nahim Essop, confirmed that S falls under the definition of a legal dependent since he is the deceased's child, and that the alimony court had already recognized the deceased's obligation to support him. Nevertheless, the adjudicator found that the fund had not conducted due diligence regarding the child's actual monthly needs, the financial situation of his guardian, or the impact of educational allowances before allocating him 80% of the death benefit.
The decision also showed that the fund had insufficiently examined the circumstances of the deceased's mother. Although she clearly met the criteria of a factual dependent, the fund did not properly verify her income, financial needs, employment prospects, or life expectancy before deciding she should receive 20% of the benefit. Essop rejected RK's demands for reimbursement of funeral and DNA testing costs, ruling that pension fund death benefits are intended to support financial dependents, not to compensate relatives for burial expenses. He also determined that the decision to conduct DNA testing was made at RK's own initiative and was not required by the fund. The adjudicator concluded that the pension fund failed to conduct a thorough investigation before exercising its discretion. Consequently, the initial distribution was declared unlawful and annulled. The fund was ordered to conduct a re-investigation and make a new decision on the distribution of the death benefit within three months.
