Section 37C of the Pension Funds Act (“the Act”) is familiar territory for boards of funds but remains a difficult terrain to navigate. Trustees know the required stages: identify dependants and nominees, assess their circumstances, make an equitable allocation, and decide how the benefit should be paid. The difficulty is not in stating the duties, but in applying them properly to real facts, competing claims, and imperfect information. Recent determinations by the Pension Funds Adjudicator show just how complex that exercise can be. This article considers a few recent determinations and the practical guidance they provide on the application of section 37C.
Dependency is determined at the date of death
The recent Nel v Allan Gray Retirement Annuity Fund and Another (EC/00132536/2025) determination provides a useful illustration of how the principles confirmed in the Constitutional Court’s judgment in Mutsila v Municipal Gratuity Fund and Others [2025] ZACC 17 (“Mutsila”) apply in practice.
In this matter, the deceased member had nominated her spouse as the sole beneficiary of the death benefit. The spouse died two weeks after the member. The fund allocated the full benefit to Ms Tu, the member’s retired housekeeper, who had received monthly financial support from the deceased, as well as a bequest from the deceased and her spouse. The executor challenged the allocation, arguing that the fund had failed to properly consider the nominated spouse’s estate.
The Adjudicator held that Ms Tu had been correctly identified as a factual dependant, but that the fund erred in treating her as the only dependant. The Act contemplates a nominee as a person who does not qualify as a dependant. The spouse was therefore not merely a nominee; he was a legal dependant as at the date of the member’s death. In line with Mutsila, dependency must be determined as at the date of death, although later events may be relevant when deciding what allocation is equitable. The spouse’s later death did not erase his status as a dependant, but it was relevant to the final allocation. The fund should therefore have recognised both the spouse and Ms Tu as dependants before deciding whether either should receive a share of the benefit, having regard to all relevant circumstances, including the spouse’s subsequent death.
The Adjudicator substituted the fund’s decision, recognised both the spouse and Ms Tu as dependants, allocated a nil benefit to the spouse because he had passed away, and awarded the full benefit to Ms Tu.
Trustees must take active steps to trace beneficiaries
In Magalela v Sygnia Umbrella Retirement Fund (Provident Section) and Another (GP/00129573/2025), the Adjudicator considered whether the fund had properly distributed a death benefit of R4 770 000.00 following a member’s death in 2016. The deceased had nominated her two major children, her daughter the complainant and her son, Lesley, to each receive 50%. The fund allocated 50% to Lesley and retained the complainant’s share while attempting to trace her. When the complainant could not be located within the period set by the trustees, the retained portion was paid to Lesley.
The Adjudicator found that the tracing efforts were inadequate. The fund relied heavily on affidavits from family members, including a beneficiary who stood to benefit from the complainant’s share, without sufficient independent verification. The tracing report reflected limited attempts and did not show sustained efforts to contact extended family members, the complainant’s husband, known associates or official sources such as the Department of Home Affairs.
The determination emphasises that trustees may not make a token attempt to trace a known dependant or nominee. Where a potential beneficiary is known to exist, the board must take reasonable, active and properly documented steps before making a final allocation. It also cautions trustees against fettering their discretion by predetermining that a retained share will automatically be paid to another beneficiary after a fixed period, without considering future developments.
The twelve-month period does not replace the duty to investigate
In Deysel v South African Retirement Annuity Fund (WC/00134728/2025), the member had died in 2007, but the fund only became aware of his death in 2020. The fund argued that, because more than twelve months had passed and no beneficiary had been nominated, section 37C(1)(c) required payment to the estate.
The Adjudicator rejected this approach. Relying on South African Retirement Annuity Fund v Pension Funds Adjudicator and Another (1163/2024) [2026] ZASCA 79, the Adjudicator held that the twelve-month period in section 37C is a guideline aimed at preventing unreasonable delay.
It is not a strict deadline that extinguishes the rights of dependants or excuses a fund from investigating. The board must still conduct a proper enquiry and actively trace dependants before deciding whether payment to the estate is permissible.
This is an important practical reminder. Funds should not treat the passage of time as a substitute for investigation. Section 37C serves a protective purpose, particularly for dependants who may not know that a benefit exists or who may lack the resources to come forward within a prescribed period.
Conclusion
Recent determinations confirm that the Adjudicator will scrutinise both the process followed by trustees and the substance of their decision. A Section 37C allocation will be vulnerable where the investigation is superficial, relevant dependants are overlooked, tracing efforts are inadequate, or the board treats statutory time periods too rigidly. For trustees, the safest approach is to conduct a thorough, evidence-based investigation and to record the reasoning behind every allocation decision. Section 37C may be complex, but its central requirement remains consistent, death benefits must be distributed fairly, lawfully and in accordance with the purpose of the Act.