The Pension Funds Adjudicator has set aside part of an Old Mutual Superfund Provident Fund death-benefit allocation after finding that the fund had not adequately justified allocating 70% of the benefit to a woman it regarded as the deceased member’s spouse and 25% to his minor daughter.
The Adjudicator, Lebogang Mogashoa, found that the board had not sufficiently demonstrated how it weighed the circumstances of the beneficiaries when exercising its discretion under section 37C of the Pension Funds Act.
At the heart of the determination is the obligation on fund boards to investigate dependants’ circumstances, consider relevant factors, and explain why a particular allocation is equitable. Mogashoa found that the board had not shown that it properly considered all relevant factors and excluded irrelevant ones when making the allocation.
Individual assessment of dependants
The dispute arose after the death of a fund member on 23 May 2025. A death benefit of R417 096.39 became payable, and the board allocated 70% to a woman it recognised as the deceased’s spouse, 25% to his minor daughter, and 5% to his mother. A stepchild, a nephew, and a former partner received no allocation.
The deceased’s mother challenged the allocation, arguing that a customary marriage had not been finalised and that the deceased’s minor daughter, whom she described as the only person fully financially dependent on him at the time of his death, had received too small a share of the benefit.
The woman maintained that she had been married to the deceased under customary law, that lobola had been paid, and that an application to confirm and register the marriage was pending before the High Court.
Mogashoa held that the validity of the customary marriage did not disqualify her from sharing in the benefit. He nevertheless found that the fund had failed to assess her circumstances and those of her son separately, despite relying on the deceased’s support of the child as part of its justification for the allocation.
Justifying the allocation
The Adjudicator also questioned whether the board had adequately justified the disparity between the 70% allocated to the woman and the 25% allocated to the minor daughter.
He noted that the woman was employed, received a social grant, and had received a funeral-policy payout, while the child remained financially dependent and faced years of future educational and maintenance needs.
The child’s guardian submitted that the child, then in Grade 11, was likely to remain financially dependent for a further seven to eight years while completing her education and tertiary studies and later reported that she had become unemployed.
Mogashoa concluded that the information before him did not sufficiently justify the allocation, and the board had not demonstrated that it properly exercised its discretion in reaching the distribution.
Actuarial models are not enough
In defending its decision, the fund said it had used an actuarial model to calculate the capital amount required to meet each beneficiary’s financial needs. The model apportioned the deceased member’s income among beneficiaries according to their degree of dependency and calculated the capital needed to support them. The fund said the available death benefit was insufficient to meet all identified needs.
Mogashoa did not reject the use of actuarial models. However, he said the board could not base its decision solely on its actuarial method “without overlaying its results with good common sense and proper reasoning”. An allocation of a death benefit required a proper and full investigation of the circumstances of all dependants, and “merely citing an actuarial model” did not provide proper justification for the decisions made by the board.
Changed circumstances and reconsideration
The child’s guardian later reported that she had become unemployed, a development she said affected her ability to support the child. The fund argued that because the allocation decision had already been communicated to the parties, it could not revisit the distribution, relying on the doctrine of functus officio.
Mogashoa disagreed that the matter could simply end there. Referring to the Constitutional Court’s judgment in Mutsila v Municipal Gratuity Fund and Others, he noted that a change in circumstances may affect the equitable distribution of a death benefit even though it does not alter a person’s status as a dependant. The fact that the fund had already communicated its allocation did not remove the need to consider circumstances relevant to an equitable distribution.
The Adjudicator also relied on Mutsila for the principle that no dependant has an automatic right to a particular share of a death benefit. Instead, allocations must be lawful, reasonable, and procedurally fair.
Mogashoa set aside the board’s decision relating to the allocations made to the woman and the minor child and ordered the fund to reconsider their financial circumstances and re-exercise its discretion within six weeks. The 5% allocation to the deceased’s mother was left undisturbed. The fund was further ordered to notify the parties and the Adjudicator of its decision after reconsidering the matter.
