The Supreme Court of Appeal (SCA) has rejected a retirement fund’s attempt to treat the words “within 12 months of the death of the member” in section 37C of the Pension Funds Act (PFA) as a cut-off that permits death benefits to be paid into a deceased member’s estate without first investigating and identifying dependants.
The SCA, in a unanimous judgment delivered on 28 May 2026, confirmed the approach taken by the Pension Funds Adjudicator and the Mpumalanga High Court. Those decisions held that the South African Retirement Annuity Fund (SARAF) could not avoid its section 37C duties because it learned of the member’s death only after 12 months had passed since his death.
The appeal turned on the interpretation of the “12 months” wording in section 37C and, as the judgment records, whether section 37C permitted the fund to pay the death benefit to the deceased’s estate before establishing the identity of dependants.
The SCA described the dispute in timing terms: whether payment of death benefits should be made within 12 months of the date of death, or 12 months after a fund becomes aware of the death.
Background facts
Marius Viljoen died intestate on 26 December 2019. He was a member of SARAF, which is underwritten by Old Mutual Life Assurance Company, and left a retirement annuity death benefit of R52 120.53. He had not nominated a beneficiary, and because the value of his estate was below R250 000, no executor was appointed.
His widow, Sophia Viljoen, was unaware of the benefit until a broker alerted her to its existence. She submitted a claim on 28 March 2022, about two years and three months after the death. SARAF repudiated her claim and resolved on 18 July 2022 to pay the benefit into the estate, despite the estate not having been reported to the Master.
Mrs Viljoen complained to the Pension Funds Adjudicator. On 23 June 2023, the Adjudicator set aside the fund’s decision and directed SARAF to investigate under section 37C, determine beneficiaries and entitlements, notify beneficiaries, and pay the benefit within specified deadlines.
In August 2024, the High Court upheld that determination. The Fund appealed to the SCA.
Read: When does the countdown for tracing a fund member’s dependants start?
SARAF contended that section 37C(1)(a) and (c) required it to pay the benefit to the estate if no dependant was traced within 12 months from the member’s date of death, and that where it only became aware of the death after 12 months, it had no obligation to trace dependants or nominees and must pay into the estate.
The SCA’s reasoning
Section 37C(1) begins with a “notwithstanding” clause and provides that death benefits “shall” not form part of the deceased member’s estate. The SCA treated this opening as central to the statutory scheme and to rejecting “estate-by-default” approaches.
As the Court put it when explaining why the fund’s position was out of step with the statutory design: “The opening words of section 37C(1) underscore the legislature’s intention to override all conflicting laws and fund rules, to exclude death benefits from the deceased’s estate, and to subject their distribution to the statutory framework of the Act.”
That framework requires the fund to conduct the statutory enquiry into beneficiaries before reaching the estate route contemplated in section 37C(1)(c).
The judgment acknowledged that the phrase “within 12 months of the death of the member” in section 37C(1)(a) – read in isolation – could bear more than one meaning. The SCA resolved the interpretive question by reading the text in context and in light of purpose, emphasising that the statutory process of tracing and verification presupposes knowledge of death and cannot sensibly be treated as extinguished before it can be undertaken.
The Court’s reasoning, however, does not recast section 37C as if “awareness” replaces the statutory wording. Rather, it explains why a fund cannot rely on the 12-month reference to avoid duties that are only capable of performance once knowledge of death arises.
The Court distinguished between identification and tracing in the section 37C process. Identification is establishing who the beneficiaries are; tracing is the evidentiary process used to locate them and may be necessary to achieve identification where the fund is not otherwise aware of dependants. This distinction supported the Court’s conclusion that a fund cannot lawfully shortcut to the estate route without first exhausting the statutory beneficiary-finding steps.
The judgment’s conclusion that payment to the estate is a last resort follows from the statute’s structure and purpose: section 37C begins by overriding conflicting laws and fund rules and excluding death benefits from estates; it then requires the fund to work through the statutory enquiry in paragraphs (a)–(c).
The Court reinforced this reading by reference to the Act’s definition of “unclaimed benefit”, which includes a death benefit under section 37C not paid within 24 months from the date on which the fund becomes aware of the death (or longer if reasonably justified in writing by the board of trustees). The Court treated that definition as contextual support for the proposition that timeframes in this area cannot be applied in a way that defeats the investigative duty.
The SCA relied on the Constitutional Court’s decision in Mutsila v Municipal Gratuity Fund and Others (2025) to explain the correct sequence and the role of the date of death. Quoting the Constitutional Court, the judgment recorded:
“Upon notification of death, the fund is required to conduct an investigation as contemplated in section 37C, read with sub-section 1, for the purposes of determining whether there are beneficiaries (dependants and nominees) and to determine the equitable allocation of the benefit […] It is only upon the conclusion of the investigation that a decision can be made as to who is a dependant. The date of death of a member is relevant to determine who relied on the member for financial support while the member was still alive.”
The SCA went further, noting that Mutsila effectively displaced the earlier approach in Fundsatwork Umbrella Pension Fund v Guarnieri (2019), under which dependency could be determined merely at the time of allocation.
The practical consequence is that dependency is assessed as at the date of death (the facts of support must have existed then), but the duty to investigate and allocate is performed after the fund learns of the death – so late notification does not excuse skipping the statutory enquiry.
The SCA was critical of SARAF’s interpretation, holding that it wrongly assumed estate payment is the default outcome and that it was out of context and contrary to the purpose of the Act, describing the consequences as producing “absurdity” by stripping beneficiaries of the statute’s protection.
The judgment provides clear guidance of practical value: estate payment is not the first resort and is only permissible once the statutory work has been done and has failed to identify dependants or nominees. As the Court stated: “Payment to the estate can only be made once all the statutory avenues for tracing and identifying dependants and nominees have been exhausted.”
The SCA dismissed the appeal with costs, including the costs of two counsel.
Pension Funds Adjudicator’s comment
The Adjudicator, Lebogang Mogashoa, said the judgment affirms his Office’s interpretation that the 12-month period in terms of section 37C commences from the date the fund is notified of the death of the member.
In other words, a fund has 12 months from the date on which it becomes aware of the member’s death – not from the date of death itself – to trace dependants and pay out the death benefit.
“We believe the judgement provides clarity on this important point of law.”
Click here to download the judgment.
