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Beneficiary Fund

Protect the future of your children

The world is an unpredictable place and there might come a time when you’re no longer able to care for your child or children.

You’ll be pleased to know that the Pension Funds Act now allows for any benefit payable to a deceased person (retirement fund member) to be paid into a beneficiary fund as opposed to a trust. This includes benefits related to employment and retirement annuities, with the latter not linked to employment.

What is a Beneficiary Fund?

Everything you need to know.

Who Needs a Beneficiary Fund?

Find out who benefits from this fund.

Benefits of Beneficiary Funds

Learn more about why you need one.

Get Advice

Contact a financial planner.

What is a Beneficiary Fund?

A beneficiary fund is a form of retirement fund where the dependant becomes a member of the beneficiary fund. This enables you to make provisions for your child’s future in the unfortunate event of your death.

A beneficiary fund is structured in the same way as a defined contribution retirement fund, with each member’s benefit and investment growth only benefitting that member. Benefits of the fund can also be paid out to a guardian or caregiver, as long as it is for the sole benefit of the child (beneficiary).

The benefits can still be paid into a trust, provided that:

  • It is a fully vested trust, where the beneficiary 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.

For more information download the Sanlam Trust Beneficiary Fund brochure

Who Needs a Beneficiary Fund?

If you are the parent of a minor, a beneficiary fund is definitely worth considering and factoring into your financial planning. Remember that, in order to create a beneficiary fund for your child, you need to have some form of retirement fund in place.

If you don’t believe that a beneficiary fund will benefit your family, consider other types of trusts such as the Sanlam Trust Guardian Trust or a Testamentary Trust.

Sanlam Trust Beneficiary Fund is currently the fastest growing and second biggest beneficiary fund in South Africa with R2.1 billion assets under management.

Benefits of a Beneficiary Fund

Protection of rights
Improved protection of beneficiaries’ benefits and rights.

Improved reporting
Better governance and reporting requirements.

Security and control
Control and regulation by the Financial Services Board (FSB).

Complaints management
Recourse to the Pension Funds Adjudicator for complaints.

Tax exemption
Beneficiary funds are exempt from tax.

Frequently Asked Questions

As a beneficiary, you don’t have to do the reporting yourself – reporting will have to be done by the Beneficiary Fund Administrator, licenced through Section 13B of the Pension Funds Act to administer these types of benefits. Payments to a beneficiary fund must comply with FSB accounting and reporting requirements. Annual audited financial statements of the beneficiary fund must also be submitted to the FSB.

A beneficiary fund is usually controlled by a board of trustees that includes an independent trustee, a principal officer, and an independent auditor.

Payments from the fund account and investment growth earned on assets are both tax free. No capital gains tax is applicable to funds in a beneficiary fund.

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

Secure Your Child’s Future

Contact a financial adviser today to find out more about beneficiary funds.

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