Beneficiary Fund

To deposit death benefits allocated to beneficiaries of members of Pension, Provident and Retirement Annuity funds who are unable to handle their own affairs, into this Fund to be managed on their behalf as prescribed by relevant legislation. This ensures that the benefits be used for the sole benefit of the relevant beneficiary.


Benefits payable 

  • All approved benefits received in terms of Section 37C of the Pension Fund Act. 

    • Payment to a trust is still possible, provided that:

    • it is a fully vested trust (beneficiariy is the owner of capital and income) and
    • the trust was nominated by the member prior to death or
    • a major beneficiary has nominated a trust or
    • a guardian/caretaker has nominated a trust

Advantages 

  • Improved protection of beneficiaries’ benefits and rights 
  • Better governance and reporting requirements 
  • Control and regulation by the FSB 
  • Resource to PFA for complaints 

Reporting to authorities 

  • Have to comply with FSB accounting and reporting requirements. 
  • Annual audited financial statements to be submitted to FSB. 

Management 

  • A Board of Trustees is appointed and includes an independent trustee 
  • A Principal Officer is appointed 
  • An independent Auditer is appointed 

Dependants / Beneficiaries 

  • A beneficiary fund is a form of retirement fund. 
  • The dependant becomes a member of the beneficiary fund. Benefits can be paid out to parties other than a member (such as a guardian or a caregiver), if it is for the sole benefit of the beneficiary
  • The structure is the same as that of a defined contribution retirement fund, with each member’s benefit and investments growth being to the sole credit of that member 

Transfer of benefits 

As from 1 September 2009, benefits are taxed before it is paid to the Beneficiary Fund - therefore AFTER TAX benefit is transferred 

Tax 
  • Payments from the fund account will be tax free 
  • Investment growth earned on assets will be tax free 
  • No capital gains tax applicable to funds in a beneficiary fund 

Investments 

  • Must comply with Regulation 28 of Pension Fund Act (prudential investment guidelines). 
  • Investment policy must be in place 

Death of beneficiary / member 

As the beneficiary is a member of the beneficiary fund, the remaining balance of the benefit in the fund will at his / her death, be paid into the beneficiary’s estate or if the estate is not reported at a Master’s office, into the Master’s Guardian Fund

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