Section 37C of the PFA outlines the procedures the trustees must follow for distributing a death benefit to qualifying beneficiaries. Although Section 37C envisages the distribution to occur within twelve months of the date of death, it typically takes much longer because it is often difficult to identify all potential beneficiaries and obtain all necessary documentation about them. What happens if a death claim has not been finalised within five years of the member’s death? Does the Administration of Estates Act prescribe that the benefit must now be paid to the Master of the High Court as an unclaimed benefit?

The duty of care requires that trustees make every reasonable effort to distribute and pay the death benefit as soon as possible. However, they cannot distribute a death benefit to an unknown or deceased beneficiary. Beneficiaries have twelve months to claim a death benefit. If the trustees have taken reasonable care to identify all potential beneficiaries, no claim may be submitted after the twelve months. The trustees cannot distribute a benefit to a potential beneficiary (whether nominated or dependent) who passed away before the deceased fund member. They must go so far as to ensure that the circumstances prevailing when the benefit was distributed are still applicable at the time the benefit is paid. If a person was awarded a benefit but passed away before the benefit was paid to them, the circumstances likely changed from the time of the benefit distribution. If they are not the same, the trustees must review the distribution. Such a review could entail that the benefit allocated to the deceased beneficiary must be paid to their estate. Consequently, a death benefit can never be unclaimed, as an allocation can only be made to identified beneficiaries who are still alive, or, under certain justified circumstances, to a beneficiary’s estate.

Once the distribution is complete, the only conceivable reason the fund is unable to pay the benefit is if banking details or other outstanding formalities are outstanding, such as a tax directive. The amount due to an identified beneficiary may become unclaimed if the necessary formalities are not completed, and would have to be paid to the Master of the High Court.

Important notice and disclaimer
This article summarises the understanding, observation and notes of the author and lays no claim on accuracy, correctness or completeness. RFS Namibia (Pty) Ltd does not accept any liability for the content of this contribution and no decision should be taken on the basis of the information contained herein before having confirmed the detail with the relevant party. Any views expressed herein are those of the author and not necessarily those of RFS.