A member of your fund has just passed away. Somewhere, a family and/or other loved ones who depended on that person are waiting to hear what happens with the deceased member’s money in the retirement fund.
The member’s retirement savings and, where applicable, any insured death cover provided by the fund that is paid out when a member dies, is called a death benefit.
Why trustees decide, and not the member’s will
Many trustees (and members) assume that when a member dies, the death benefit goes to whoever is named on the member’s beneficiaries nomination form, or to whoever the will says should inherit. This is not correct.
Death benefits from a retirement fund are governed by Section 37C of the Pension Funds Act, which makes the board of trustees responsible for determining how the death benefit should be allocated after identifying and considering all dependants and nominees. This effectively gives the board of trustees, not the deceased member, the final say over who receives the money.
The reason for this is the protection of the member’s dependants. Section 37C exists to make sure that all the people who relied on the member for financial support are not left destitute. A nomination form is only a guide. It helps trustees understand who the member wanted to benefit, but it does not bind them.
Trustees must look beyond the form and investigate and consider both legal and factual dependants. In other words, not only those who the law defines as dependent, but also anyone else who received financial support from the member when they died. This can include a spouse, children, a life partner, or even a person with no blood relation. Yes, this could include a nyatsi (secret lover).
The 12-month countdown
Once a member dies, trustees have up to 12 months to trace and identify everyone who might have a claim to the benefit. This does not mean that the investigation should take that long. If, after a proper investigation, the board is satisfied that it has found all the dependants, it can and should pay out as soon as it can.
The maximum 12-month period is there to protect dependants from a rushed or incomplete search, and not to give trustees an excuse to sit on a decision.
If a fund drags its feet without good reason, a family can complain to the Office of the Pension Funds Adjudicator, which can order the fund to finish its investigation and pay out.
Where trustees go wrong
The most common reason a decision gets overturned is a weak investigation. This happens when trustees rely only on the nomination form, accept claims without checking them, or take a shortcut by splitting the benefit equally between claimants without looking at each person’s circumstances.
An equitable decision is not the same as an equal one. A trustee must weigh each dependant’s needs, age, and level of financial reliance on the member, and must write down the reasoning behind the final decision. Getting this right protects both the family and the trustees.
Before the next case lands on your desk, make sure your board has a clear process: write to all possible beneficiaries, gather proof of financial dependency, and record every step and every reason.
A well-documented decision, made with care rather than haste, is one a family can trust – and one that will hold up if it is ever questioned.
