These are
important to know as it affects anyone who has a retirement fund or is part of
a workplace Pension/Provident fund. This feels like it is completely out of
your hands as even if you nominate beneficiaries the Trustees may decide to pay
your benefit out differently to your instructions. The point of this matter is
that if your affairs aren’t in order when you pass, it is highly likely that
your estate will not be wound up the way you want it to be.
This article is from Saturday Star's Personal Finance section – I have extracted points that I see are most pertinent from this
bullet point article. I have included a link to
the full article at the bottom and if this does affect you I would consider
reading it.
- The decision on who gets your retirement
fund benefits when you die in service is not yours to make, but rather… by the trustees of your retirement fund.
You can and should nominate beneficiaries, but your retirement fund trustees are obliged to determine if you have dependants and to distribute your benefits to those dependants in a way that they determine is equitable (see 6) - Only if your fund cannot trace any dependants, can it pay your benefits to someone you have nominated. However… only… if the estate is solvent. If there is a deficit in the estate, then that liability must be settled first, before the nominees can be paid.
- …
- … benefits (must be paid) within 12 months of your death…
- Your dependants can be legal in nature - such as spouses, children, parents (in certain circumstances) – or people you have no duty to maintain but who are factually dependant on you… This means the trustees could consider distributing your benefits to… people not related to you.
- Determinations issued by the Pensions Funds Adjudicator… have stated that trustees must consider:
- Age of dependants;
- Their relationship with you;
- The extent of their dependency on you;
- The amount available for distribution;
- The financial affairs of the dependants;
- The wishes of the deceased (as a guide only); and
- The future earning potential and prospects of the dependants.
- Your trustees can also decide how the amounts should be paid….
- If you leave the service of your employer and you die before the withdrawal benefit is paid to you, your beneficiaries are not entitled to a death benefit. Instead, the withdrawal benefit must be paid into your estate.
For the
full article check out - http://www.iol.co.za/business/personal-finance/retirement/limited-recourse-on-death-benefit-decisions-1.1664689#.UzFzy1dWhtw
