![]() Giselle Gould, Business Development Director of Fairheads Benefit Services, says that unclaimed benefits in South Africa are already a vast problem. According to the amendment, unresolved death benefits older than 24 months should be paid into an unclaimed benefits fund. ![]() This is intended to have the indirect effect of decreasing the burden on the State to provide for these people and promotes social protection, which is to be implemented by pension fund boards.”įairheads has described the recent amendment to the Pension Funds Act as disappointing. “The dilution of the member's freedom of testation, together with the limited impact of a completed nomination form, is a very clear indication of the legislature's intention of ensuring that no dependants of pension fund members, regardless of whether such dependants are factual or legal, should be left without financial support in the event of the member’s death. According to Norton Rose Fulbright Director, Michelle David, this is done to ensure that there are no unnecessary burdens on the state. ![]() There is also a specific legal reason why this form is merely seen as a guideline. What is more is that these funds are cost effective and tax effective, and offer institutional investment returns,” he says. By safeguarding minors’ assets, beneficiary funds fulfil a vital social role. But the reality is that many guardians in South Africa are financially illiterate. “The power of trustees to override a guardian and place funds in beneficiary funds for minor children, is not without contention. The task is often complicated by uniquely South African challenges such as customary marriages, dual families of migrant workers and the contentious issue of whether guardians are capable of managing monies in the best interests of minor children. Krepelka adds that pension fund trustees hold enormous responsibilities when it comes to the allocation of death benefits. These can include friends, societies and others,” he says. Nominees such as those mentioned on the nomination form of the member, who do not fit into the categories previously mentioned, falls into the last category. Secondly are factual dependants who include family like parents, siblings and extended family. Firstly, the dependant’s children born in or out of wedlock, adopted children, legal or cultural spouses and partners, including same sex partners. “In making the death benefits allocation, Boards of Trustees will make provision for dependants in the following order. When asked why such a ruling was made, the PFA pointed out that while the nomination form is an important document, it is merely a guideline and other considerations take precedence when distributing death benefits.įairheads Benefit Services Chief Executive Officer, Richard Krepelka, says that there is a distinct pecking order when it comes to these considerations. This was raised after a recent determination by the PFA saw a beneficiary having her contribution decreased in order to make funds available for additional dependents who were not mentioned on the form. Beneficiary nomination forms play in key role in these rulings, but does it play a central role? ![]() A lot of families who are affected by unemployment, rely on the pension benefits of deceased relatives to survive. The high level of unemployment, which is an unfortunate reality in South Africa, highlights the issue of the distribution of pension funds benefits.
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