A sister who was nominated by her late brother to receive a life insurance benefit of over R1.93 million was unhappy after her nephew inherited a huge portion from his father’s death benefit.
The dispute arose after LP died in October 2023, leaving a R654,693.82 death benefit available for distribution. The fund allocated 80% (more than R523,000) to the deceased’s son, S, and 20% (more than R130,000) to the deceased’s mother, EM. Meanwhile, the deceased’s sister, RK, received nothing.
RK challenged the allocation, arguing that S was not financially dependent on the deceased and claimed that her late brother had denied being the child’s father.
DNA tests were conducted, and the results confirmed that the boy, who was three years old when his father died, was biologically related to the deceased.
Unsatisfied with the outcome, RK argued that her elderly mother, a pensioner who had depended entirely on the deceased for her daily living expenses, deserved a much larger share of the benefit than the 20% she received. She also sought reimbursement for the money she had spent on her brother’s funeral.
However, the retirement fund argued that RK was the sole beneficiary of her brother’s R1,934,910.72 life insurance benefit. The fund explained that neither S nor the deceased’s mother benefited from that insurance payout, as a result, the fund was prompted to allocate the pension fund death benefit exclusively between the child and the mother.
The deceased’s mother, EM, confirmed that she had lived with her son until his death and relied on him for food, housing, transport, utilities, and medical expenses. She maintained that she was fully dependent on him and believed the allocation unfairly favoured S, who was only partially dependent through maintenance payments.
Meanwhile, S’s mother disputed RK’s claims and submitted that the deceased had acknowledged paternity during maintenance court proceedings, which resulted in a court order requiring him to pay R500 a month towards the child’s upkeep. She further stated that her son has speech delays requiring therapy and additional medical treatment.
In his determination, Deputy Pension Funds Adjudicator Naheem Essop confirmed that S qualified as a legal dependant because he was the deceased’s child and that the maintenance court had already recognised the deceased’s responsibility to support him.
However, the adjudicator found that the fund had failed to investigate the child’s actual monthly financial needs, his guardian’s financial position, or the impact of his educational benefit before allocating him 80% of the death benefit.
The ruling also found that the fund had inadequately investigated the circumstances of the deceased’s mother. Although she clearly qualified as a factual dependant, the fund had not properly examined her income, financial needs, employment prospects, or life expectancy before deciding that she should receive 20% of the benefit.
Essop dismissed RK’s claims for reimbursement of funeral expenses and the costs of DNA testing, ruling that pension fund death benefits exist to support financial dependants rather than compensate relatives for burial costs. He also found that the decision to arrange the DNA testing was made on RK’s own initiative and was not required by the fund.
The adjudicator concluded that the retirement fund had failed to conduct a thorough investigation before exercising its discretion. As a result, the original allocation was declared improper and set aside.
The fund has been ordered to reinvestigate the matter and make a fresh decision on the distribution of the death benefit within three months.
