When a member of a pension or provident fund dies, the fund benefit is often the largest single amount the family will ever deal with. It is also the amount most often misunderstood. A section 37C death benefit is not distributed by the executor, it is not governed by the will, and it is not handed to whoever is named on the nomination form. It is decided by the fund’s board of trustees.
This article deals with death. Where a retirement fund is divided because a marriage ends, a different provision applies, namely section 37D of the Pension Funds Act read with the pension interest provisions of the Divorce Act. That is a separate subject. Everything below concerns what happens when a member dies.
The reader this article is written for is usually a surviving customary spouse whose marriage was never registered, a life partner with no marriage at all, or an adult child who has been told that the other household is disputing the claim. The question is always the same. Who decides the pension when a spouse dies, and what has to be proved to secure a share of a section 37C death benefit.
Vermeulen Attorneys assists surviving spouses, life partners and children with disputed retirement fund claims. If a fund has told you that your claim is disputed, or you have received an allocation letter you believe is wrong, contact Vermeulen Attorneys to arrange a consultation before you respond to the fund.
Section 37C Death Benefits Fall Outside the Deceased Estate
Section 37C(1) of the Pension Funds Act 24 of 1956 provides that a benefit payable by a registered fund on the death of a member does not form part of the assets in the estate of that member. That is subject to a pledge in accordance with section 19(5)(b)(i) and to the provisions of sections 37A(3) and 37D. A pension payable to the spouse or child of the member under the rules of the fund is dealt with under those rules instead.
The practical consequence is where most families lose time. The deceased estate consists of what belonged to the deceased, such as the house, the vehicles, the bank accounts and the debts. The executor administers that estate, accounts to the Master, pays the estate debts and distributes what remains under the will or under intestate succession. A section 37C death benefit runs on an entirely separate track, with a different decision-maker, a different test and a different remedy if something goes wrong.
A surviving customary spouse who has spent months dealing only with the executor and the Master’s Office may have been dealing with the wrong process. Notifying the Master is not a claim against the fund. The fund has to be notified directly. A retirement fund death benefit dispute is not resolved on the estate file, and no instruction to the executor moves it forward.
The two processes run in parallel, and information passes between them, but they are not one claim. Where there is also an estate-side fight, the remedies differ. The estate route deals with disputed claims against a deceased estate and, at the accounting stage, with objecting to a liquidation and distribution account. Neither of those remedies touches the fund benefit.
Who Can Claim a Section 37C Death Benefit
The Act defines a “dependant” in section 1, and the definition has three limbs. Each limb is an independent route into a section 37C death benefit.
A legal dependant is a person in respect of whom the member was legally liable for maintenance. The obligation arises from law, not from generosity. A spouse falls here, including a spouse by customary marriage. So does a child the deceased was legally obliged to support.
A factual dependant is a person in respect of whom the member was not legally liable for maintenance, but who was, in the opinion of the board, upon the death of the member in fact dependent on the member for maintenance. The same limb expressly includes the spouse of the member and a child of the member, including a posthumous child, an adopted child and a child born out of wedlock. A parent, a sibling or an extended-family member typically claims on this basis, and so, commonly, does a life partner.
A future dependant is a person in respect of whom the member would have become legally liable for maintenance had the member not died. An unborn child is the standard example.
Two points matter and are routinely misread. The statute does not rank these categories, so there is no rule that a spouse outranks a child, or that a legal dependant outranks a factual dependant. Qualifying as a dependant also establishes only that the board must consider you. It does not fix your share of a section 37C death benefit, and it does not create a minimum share.
Dependant and Nominee: Why the Nomination Form Is Not the Answer
A member may complete a beneficiary nomination form. That form is evidence of the member’s wishes. It does not decide the destination of a section 37C death benefit where the section applies.
The Act treats a dependant and nominee as occupying different positions:
- Under section 37C(1)(a), where the fund becomes aware of or traces a dependant within twelve months of the death, the benefit is paid to that dependant, or, as may be deemed equitable by the fund, to one of them or in proportions to some or all of them.
- Under section 37C(1)(b), where no dependant is traced within twelve months and the member designated in writing a nominee who is not a dependant, the benefit or the specified portion is paid to that nominee. A proviso applies where the debts in the estate exceed the assets. So much of the benefit as equals the difference is then paid into the estate, and the balance goes to the nominee.
- Under section 37C(1)(bA), where there is both a dependant and a designated nominee, the fund must within twelve months pay the benefit or the relevant portion to the dependant or nominee in such proportions as the board may deem equitable. That paragraph applies only to a designation made on or after 30 June 1989.
- Under section 37C(1)(c), where no dependant is traced within twelve months and there is no nominee, or only a partial nomination, the benefit or the remaining portion is paid into the estate. If no inventory has been received by the Master under section 9 of the Administration of Estates Act 66 of 1965, it is paid into the Guardian’s Fund or an unclaimed benefit fund.
Two errors follow from misreading this. Saying that the nomination form determines who gets the money is wrong. Saying that the nomination form is irrelevant is equally wrong, because it can weigh materially in the board’s equitable allocation. A nominee also does not have to prove financial dependency in order to be considered as a nominee. The claims of a dependant and nominee rest on different foundations. The dependant qualifies under the statutory definition, and the nominee derives the claim from the designation. A person cannot be rejected as a nominee simply because the deceased was not supporting them.
Claiming a Section 37C Death Benefit as a Customary Spouse
Death benefits in a customary marriage raise a proof problem rather than a validity problem.
Section 4(9) of the Recognition of Customary Marriages Act 120 of 1998 provides that failure to register a customary marriage does not affect the validity of that marriage. Section 4(8) provides that a certificate of registration constitutes prima facie proof of the existence of the marriage and of the particulars contained in the certificate. Read together, the position is straightforward. Registration through the Department of Home Affairs gives you a short route to proof. The absence of registration removes the short route. It does not remove the marriage.
Without a certificate, the underlying marriage has to be proved. Section 3(1) of the Act sets the requirements for a customary marriage entered into after the commencement of the Act. The prospective spouses must both be above the age of 18 years, must both consent to be married to each other under customary law, and the marriage must be negotiated and entered into or celebrated in accordance with customary law. The same proof framework applies when proving a customary marriage in South Africa during the lifetime of the spouses.
The evidence that speaks to those requirements includes lobolo negotiations, agreements, receipts and proof of payment or part payment; the evidence of the family members who conducted the negotiations; evidence of the handing over or the customary ceremony, including photographs and videos; joint accounts, leases and insurance or medical-aid records reflecting the nature of the relationship; and the deceased’s own employer and fund records in which he identified her as his spouse.
The strongest claims are cumulative. Several independent sources tell the same story. The families negotiated, there was a ceremony or a handing over, the couple lived as husband and wife, and the deceased consistently described her as his spouse.
Claims usually fail where they rest only on the claimant’s own statement that she was the wife, on long cohabitation with nothing showing that the relationship was entered into as a customary marriage, on a funeral programme describing someone as a wife, on proof that lobolo was discussed without evidence connecting it to a concluded marriage, or on a single family affidavit contradicted by other witnesses.
Failure to prove the marriage does not end the claim to a section 37C death benefit. Factual dependency is a separate and independent basis, assessed on the financial reality rather than on marital status. The point that an unregistered customary marriage can still be valid is the answer to the objection funds and rival claimants raise most often.
Vermeulen Attorneys assists surviving spouses with customary marriage matters and disputed fund claims. If your marriage is being questioned by the fund or by another household, obtain legal advice before the board makes its allocation.
Claiming as a Life Partner Where There Was No Marriage
A life partner who cannot point to a marriage is not shut out of a section 37C death benefit. The route into a section 37C death benefit is factual dependency. The board has to form a view on whether the claimant was, upon the death of the member, in fact dependent on the member for maintenance.
That turns on evidence of the financial relationship rather than on the label the parties used. A partner who shared a household, whose rent or bond and household costs were paid by the deceased, and whose children were supported by the deceased, is in a materially stronger position than a partner who can show only cohabitation and affection.
The Board’s Duty to Investigate Dependants
Section 37C requires the fund to become aware of or trace the dependants of the member. That is an active duty to investigate dependants. A board that opens the nomination form and pays the named person has not done what the section requires where dependants exist.
A proper enquiry ordinarily involves contacting the spouse or spouses, tracing children and other dependants, investigating an alleged customary marriage rather than dismissing it for want of registration, contacting nominees, and assessing the circumstances and needs of the various claimants. It becomes considerably more involved where there is a polygynous family, disputed paternity, a former spouse, or several competing households.
Once the enquiry is sufficiently complete, the board exercises its statutory discretion and decides the proportions of the section 37C death benefit. The standard set by the section is an equitable allocation, and equitable does not mean equal. Relevant considerations can include the relationship to the deceased, the extent of dependency, the ages and circumstances of the dependants, the wishes of the deceased and the amount available. A dependant and nominee are both considered, and neither holds a right to a specific share. The only right is the right to be properly considered.
What Happens From the Date of Death, and What the Twelve Months Really Mean
The sequence towards payment of a section 37C death benefit is usually as follows.
- The fund is notified and opens a death-benefit claim. Notification to the Master or to the executor does not do this.
- Documents are requested. Ordinarily the death certificate, the identity document and fund details of the deceased, the identity document of the claimant, proof of the marriage or relationship, birth certificates of the children, evidence of financial dependency, details of other possible dependants, and the beneficiary nomination if available.
- The board investigates, allocates, and determines the appropriate mode of payment.
- The fund pays once the administrative requirements are met.
The twelve months in section 37C(1)(a), (b) and (bA) is an identification and tracing period, with statutory consequences attached to it. It is not a payment deadline and it is not a compulsory waiting period. A fund may allocate a section 37C death benefit earlier once a proper enquiry is complete, and an unexplained delay can be challenged. Telling a claimant that the fund has twelve months to pay is inaccurate.
A Section 37C Death Benefit Payable to Minor Children
A surviving parent does not automatically receive and control the share of a child.
Section 37C(2)(a) provides that a payment for the benefit of a dependant or nominee is deemed to be a payment to that person if it is made to a trustee contemplated in the Trust Property Control Act, 1988, to a person recognised in law or appointed by a court as responsible for managing the affairs or meeting the daily care needs of the dependant or nominee, or to a beneficiary fund. Section 37C(2)(b) provides that no payment may be made under the section on or after 1 January 2009 to a beneficiary fund which is not registered under the Act.
Section 37C(3) allows a section 37C death benefit payable to a minor dependant or minor nominee to be paid in more than one payment, in such amounts as the board may from time to time consider appropriate and in the best interests of that dependant or nominee. Interest at a reasonable rate, having regard to the fund return earned by the fund, must be added to the outstanding balance at such times as the board may determine. Any balance owing when the child attains majority or dies, whichever occurs first, must be paid in full.
A surviving parent may well be the person recognised in law as responsible for the affairs or daily care of the child, and the section accommodates payment to such a person. The fund has to be satisfied of that. No family should assume that an informal family trust will be accepted, or that a beneficiary fund is an appropriate default.
Evidence That Persuades a Board of Trustees
The duty to investigate dependants is discharged on the material placed before the board, which is why what you submit matters more than how strongly you assert your position. A section 37C death benefit is allocated on the record the board actually has.
Direct financial evidence is usually strongest. Bank statements showing regular transfers from the deceased, proof that the deceased paid rent, bond, electricity or groceries, school-fee payments, medical expenses, insurance records and recurring debit orders paid for the claimant.
Evidence of the shared household carries weight where the deceased supported the household rather than transferring money to one person. A shared address, leases and municipal records, household bills, school and medical-aid records, and correspondence identifying the claimant as spouse or partner.
Independent evidence is where family affidavits earn their place. An affidavit from a relative who genuinely knows the financial arrangements of the household can corroborate who lived with whom, who paid what, and whether the claimant had an income of her own. Such an affidavit is not worthless. It is simply vulnerable when it stands alone and the other household disputes it.
What to Preserve Immediately After the Death
Much of the material that decides a section 37C death benefit is lost in the first weeks, before anyone consults an attorney. Preserve the following.
- Marriage evidence. Lobolo records, receipts and agreements, family correspondence, the names of everyone involved in the negotiations, evidence of the ceremony or handing over, photographs and videos, and any Home Affairs correspondence.
- The dependency trail. Bank statements for both parties, proof of transfers and cash remittances, school-fee receipts, rent or bond payments, utility bills, insurance and medical-aid records, and evidence of the claimant’s own income if any.
- The records of the deceased. Employer and human resources records, nomination forms, insurance and emergency-contact records, and tax records reflecting how he described her.
- Fund identification. Payslips, benefit statements, fund correspondence, retirement-annuity statements, membership numbers and details of previous employers.
- Electronic evidence. Do not delete messages, emails, photographs or voice notes, and do not rely on screenshots alone. Preserve the original conversation and keep the device.
Bring these documents to a consultation before you send anything to the fund. Vermeulen Attorneys handles deceased estates litigation and death benefit claim assessments. Assembling the record properly at the outset is far more effective than repairing it on complaint.
If You Disagree With the Allocation: Representations, Complaint and the Adjudicator
A retirement fund death benefit dispute is worth taking further where there is a material flaw in the process by which the section 37C death benefit was allocated, rather than simple dissatisfaction with the percentage awarded. Examples include a failure to recognise a genuine dependant, rejecting an unregistered customary spouse for want of a certificate, ignoring important evidence, an inadequate enquiry, treating the nomination form as decisive, or failing to deal with competing claims. A challenge that argues only that the share is too small is weak.
The sequence is as follows.
Written representations to the board. Put the evidence and the legal basis before the decision-maker while the decision is still live.
A written complaint to the fund under section 30A. Section 30A(1) allows a complainant to lodge a written complaint with a fund for consideration by the board. Section 30A(2) requires the complaint to be properly considered and replied to in writing by the fund, or by the employer who participates in the fund, within 30 days after receipt. Ask for the allocation decision, the reasons, the dependants considered, the evidence relied on, the dependency assessment and the payment status.
A complaint to the Pension Funds Adjudicator. Section 30A(3) provides that if the complainant is not satisfied with the reply, or the fund or employer fails to reply within 30 days after receipt of the complaint, the complainant may lodge the complaint with the Adjudicator. Under section 30A(4), and subject to section 30I, the Adjudicator may on good cause shown by any affected party extend those periods or condone non-compliance with them.
Two statutory limits deserve close attention.
Three years. Section 30I(1) provides that the Adjudicator shall not investigate a complaint if the act or omission to which it relates occurred more than three years before the date on which the complaint is received in writing. Section 30I(2) applies the provisions of the Prescription Act, 1969 relating to a debt to the calculation of that three-year period. Prolonged informal negotiation with a fund is not a neutral choice.
Litigation first can close the door. Section 30H(2) provides that the Adjudicator shall not investigate a complaint if, before the lodging of the complaint, proceedings have been instituted in any civil court in respect of a matter which would constitute the subject matter of the investigation. Section 30H(3) provides that receipt of a complaint by the Adjudicator interrupts the running of prescription. Issuing court process reflexively can therefore remove the cheaper route.
A complaint to the Pension Funds Adjudicator is a complaint about the conduct and the decision of the fund. The Adjudicator is not a fresh allocation committee, and the process should not be approached as though a preferred split can simply be substituted. Where you wish to read the legislation or a reported judgment yourself, the consolidated materials are available on SAFLII.
Common Mistakes on All Three Sides
By claimants. Assuming that the file of the executor reaches the fund. Assuming that proving spouse status secures the whole benefit. Relying on an affidavit where bank records exist. Treating marital status and financial dependency as the same question. Allowing informal negotiation to run past the three-year limit.
By rival households. Assuming that an unregistered customary marriage is invalid rather than challenging it with contrary evidence. Treating the nomination form as decisive. Forgetting that the rival household must also prove its own status, dependency and needs.
By funds and boards. Failing to conduct a genuine enquiry. Treating a nominee as the beneficiary where dependants exist. Rejecting an alleged customary marriage for want of registration rather than investigating it. Giving a bare percentage with no reasons. Holding a section 37C death benefit for twelve months as though the period were a compulsory wait.
When to Get Attorneys Involved
Bring the matter to an attorney when the fund disputes your status, when the allocation letter arrives, when months pass with no explanation, or when another household has begun making representations you have not seen. In a section 37C death benefit claim the most useful intervention is usually the earliest one, because the board decides on the record placed before it.
If a retirement fund has told you that your claim to a death benefit is disputed, or you have received an allocation you believe is unfair, contact Vermeulen Attorneys and bring the letter from the fund together with your supporting documents for assessment.
Frequently Asked Questions
Does the will decide the pension when a spouse dies?
No. Section 37C(1) provides that the benefit does not form part of the assets in the estate of the member, subject to a pledge under section 19(5)(b)(i) and to sections 37A(3) and 37D. The will governs the estate. The board of the fund decides the pension when a spouse dies.
Can I claim a section 37C death benefit if our customary marriage was never registered?
Yes, you can claim. Section 4(9) of the Recognition of Customary Marriages Act 120 of 1998 provides that failure to register does not affect the validity of the marriage. The difficulty is evidential, because you must prove the marriage without the prima facie proof that a registration certificate provides under section 4(8). If the marriage cannot be proved, factual dependency remains available as a separate basis.
How are death benefits in a customary marriage split where there are two spouses?
The Act does not rank spouses and does not set shares. The board must identify the dependants and make an allocation it deems equitable, having regard to the circumstances. Both households have to prove their own status, dependency and needs, and the outcome depends on the facts and on the evidence placed before the board.
How long does a fund have to pay a section 37C death benefit?
The twelve months in section 37C(1)(a), (b) and (bA) is the period for becoming aware of or tracing dependants, with statutory consequences flowing from that process. It is not a payment deadline. A fund may pay sooner once its enquiry is complete, and unexplained delay can be challenged.
Can I be paid if I was only a life partner and never married?
Possibly. A life partner ordinarily claims as a factual dependant, meaning a person who was, in the opinion of the board, upon the death of the member in fact dependent on the member for maintenance. The claim stands or falls on the evidence of actual financial support.
What does a complaint to the Pension Funds Adjudicator actually achieve?
It puts the conduct and the decision of the fund under scrutiny. Section 30A requires you to complain to the fund first and allows 30 days for a written reply. A complaint to the Pension Funds Adjudicator is barred by section 30I(1) where the act or omission occurred more than three years before the written complaint is received, and by section 30H(2) where civil proceedings on the same subject matter were instituted first.
Will the share of my child be paid to me?
Not automatically. Section 37C(2)(a) permits payment to a trustee contemplated in the Trust Property Control Act, 1988, to a person recognised in law or appointed by a court as responsible for the affairs or daily care of the minor, or to a beneficiary fund. Section 37C(2)(b) prohibits payment on or after 1 January 2009 to a beneficiary fund that is not registered under the Act. Section 37C(3) allows a benefit payable to a minor to be paid in more than one payment, with interest, and requires the balance to be paid in full on majority or death.
The other household received more than I did. Can I challenge the split?
You can challenge the way the section 37C death benefit was allocated, but the challenge should identify an error in the enquiry, the facts, the legal approach or the exercise of the discretion of the board. Arguing only that the percentage is too low is unlikely to succeed. Whether a challenge is worth bringing depends on the reasons given and on the evidence available.
