Pension fund prioritises widow's needs over stepsons' claims in landmark ruling

In a landmark ruling, the Financial Services Tribunal has upheld the rights of pension funds to prioritise the financial needs of dependents, awarding a widow R7.6 million from her late husband's pension.

The widow, only identified as Mrs G, faced the wrath of her two stepsons after they had lost out on receiving a portion of their late father’s pension.

They turned to the tribunal and asked it to reconsider the Pension Fund Adjudicator's determination to uphold the allocation of a death benefit by the Old Mutual Superfund to their stepmother.

The deceased was a member of the fund from October 4, 1991, until his passing in February 2021. Following his death, a benefit of R7.6 million became due and payable to his beneficiaries.

The complaints of the sons - both adults - are that the fund failed to consider their needs. The fund, on the other hand, submitted that it conducted a dependency investigation and exercised its discretion, which the adjudicator upheld.

The tribunal said the fund is enjoined to investigate and ensure an equitable allocation of the death benefit to beneficiaries.

The fund is required to consider various factors, such as the age of the dependents, their relationship with the deceased, the extent of the dependency, and the wishes of the deceased.

The evidence indicates that the fund conducted interviews with the relevant parties and a review of the documentation submitted.

Ultimately, the fund identified potential dependents, assessed their financial circumstances, and exercised its discretion to allocate the entire death benefit to the widow.

The tribunal commented that the fund makes the fundamental point that it is not for the adjudicator, nor for this tribunal, to decide whether they agree with the fund. The question before the tribunal is rather to assess whether the fund applied its discretion fairly and without misdirection.

In the circumstances, even if the allocation were referred back to the fund, it is unlikely that the latter would reach a different allocation, the tribunal said.

The fund comprehensively set out the methodology it adopted and the factors it considered, in finding in favour of the widow. It is difficult to find fault with the fund's application and methodology, as it identified potential dependents, assessed their financial circumstances, and decided to allocate the entire death benefit to the spouse, the tribunal said.

“It would appear that the applicants (sons) are simply dissatisfied with the allocation, which is not enough to support an application for reconsideration,” the tribunal said.

In turning down the application by the sons, it was concluded that, in the circumstances, the fund cannot be faulted for the death benefit allocation arrived at.

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