A former housekeeper who worked for her employer for 31 years has been awarded the full R1.8m death benefit from her late employer’s retirement annuity.
This after the office of the Pension Funds Adjudicator dismissed an attempt by the executor of the deceased estate to set aside the allocation.
Boniswa Tu worked as a housekeeper for the deceased and her husband until her retirement. After she retired, the deceased continued to pay Tu R3,500 per month, which was she used for groceries and other living expenses.
The deceased died in September 2024 and the following month her husband also died. They each bequeathed R200,000 to Tu from their respective estates.
The complainant, in her capacity as executrix of the deceased’s estate, continued the monthly payments of R3,500.00 to Tu. The deceased’s death benefit of R1,890,631 became available for allocation under section 37C of the Pension Funds Act.
The deceased and her husband had no children, and she nominated him as the sole beneficiary. Following the death of the deceased and her husband, the Allen Gray Retirement Annuity Fund resolved to allocate 100% of the death benefit to Tu.
Unhappy with the allocation, the complainant challenged the decision to award the full death benefit to Tu, based on section 37C(1)(a), arguing that the fund had incorrectly identified Tu as a sole dependent.
The complainant submitted that because the deceased had nominated her husband as the beneficiary of the retirement annuity, the fund should have based its decision on section 37C(1)(bA) or section 37C(1)(b) of the act, which deal with the distribution of benefits to nominees and dependents.
The complainant further claimed that the bequests of R200, 000 each by the deceased and her husband was for the purpose of replacing the monthly stipend to ensure Tu was not left without support.
She concluded that Tu, having received the inheritance, was no longer dependent on the deceased. Alternatively, she submitted that if Tu remained partly dependent on the deceased and the deceased’s husband had been the sole nominee, there must be an equitable distribution of the benefit between the late estate of the deceased’s husband and Tu. The fund would then dispose of the matter in terms of section 37C(1)(bA).
In her complaint, she requested the Pension Fund Adjudicator to investigate the matter, determine whether Tu was a dependent, alternatively, to the extent that it is determined that Tu was still a dependent, order an equitable distribution of the benefit between the deceased’s husband and Tu.
In reply, the fund submitted that following an investigation, it had determined that Tu was the deceased’s sole factual dependent.
Its decision to distribute the entire benefit to Tu was made in terms of section 37C(1)(a) of the act since Tu was the deceased’s only factual dependent and the deceased did not nominate any other persons who were not dependents.
The fund submitted that in terms of the definition of dependent in the act, the deceased’s husband qualified as a dependent and not a nominee. Since there were no nominees identified, it applied section 37C(1)(a) of the act for purposes of the death benefit allocation and was legally precluded from applying section 37C(1)(bA) or section 37C(1)(b).
In determining whether the fund had correctly allocated the deceased’s death benefit in terms of section 37C of the act, Deputy Pension Funds Adjudicator Naheem Essop upheld the allocation of the entire death benefit of R1,890,631 to Tu. He found that both the deceased’s husband and Tu qualified as dependents.
In arriving at its decision the fund identified Tu as the sole dependent and therefore did not effect an equitable distribution. The deceased’s husband remained a dependent, notwithstanding his death prior to the fund’s allocation decision. Therefore, the fund did not properly apply section 37C(1)(a) of the act. Accordingly, it was incorrect for the fund to approach the matter on the basis that Tu was the sole dependent and that the benefit therefore had to be paid to her without an equitable allocation.
Essop further said that husband’s subsequent death did not remove him from the class of dependents who had to be considered. The fund was, therefore, required to recognise both the husband and the former housekeeper as dependents and then undertake an equitable allocation exercise.
However, despite a finding that the fund approached the matter on an incorrect basis, Essop concluded that the outcome was ultimately correct based on the facts and the purpose of the Pension Funds Act. He said that there was no need to send the matter back to the fund as doing so would only cause unnecessary delay. Essop concluded that allocating the entire R1.89m benefit to Tu was fair and legally justified.
