When a member of a retirement fund in South Africa passes away before reaching retirement age, the Pension Fund Act’s Section 37C steps in to regulate how their death benefit is distributed. A key part of this process is identifying who qualifies as a “dependant” – a term that carries specific meaning under the law and can affect who receives support.
In legal terms, a dependant includes anyone the deceased was financially responsible for maintaining. This typically covers a spouse, minor children or even a disabled adult child unable to support themselves. However, Section 37C goes beyond strict legal obligations. It also recognises “factual dependants” – people who relied on the deceased for financial support, even if there was no legal duty. For example, this could include a partner in a long-term relationship, elderly parents or a sibling living in the same household, provided they can prove dependency.
The Pension Fund Act prioritises these dependants over a deceased member’s will or nominated beneficiaries, aiming to prevent financial hardship. Trustees of the fund assess each case, looking at factors like the extent of reliance, the dependant’s income and their relationship to the deceased. This can sometimes lead to surprises – say, a nominated friend receiving nothing if a dependant child is identified.
Understanding who qualifies as a dependant under Section 37C is crucial for South Africans planning their financial legacy. It’s a reminder that pension benefits serve a protective role, ensuring those left behind aren’t forgotten. For more guidance, contact Uphando.