At Fairheads we are concerned that many large retirement funds have not yet appointed a beneficiary fund and choose to retain and administer minors’ benefits in the retirement fund itself. In certain circumstances, where the assets of children need to be retained for a short period of time, it would be acceptable to retain these assets in the retirement fund, but this should be the exception rather than the rule.

This article explains why retirement funds are simply not designed to cater for the specialised, high-intensity administration of children’s benefits which require very specific asset allocation, communication and other processes.

In terms of section 37C of the Pension Funds Act, the trustees of retirement funds have four options when deciding how to allocate benefits due to minor dependants/nominees who have lost a breadwinner. They can pay a lump sum benefit to the guardian; retain and administer the monies in the retirement fund; pay the funds to a trust (if a trust nominated by the member or guardian); or pay them to a beneficiary fund, which is the pension fund vehicle government introduced in 2009 to safely house the assets of “widows and orphans.”

Following years of verbal engagement, a formal written submission has recently been made to the Financial Services Board to amend pension fund legislation such that death benefit lump sums administered by beneficiary funds, umbrella trusts or retirement funds on behalf of minor dependants not be automatically paid out to such minors when they turn 18. The submission was made on behalf of the industry via the Institute for Retirement Funds Africa (IRFA).

Yvonne Mahlatji joined Fairheads in 2008 as a consultant in the Sandton office. She is currently the Key Accounts Manager, managing four consultants in Johannesburg, Sandton and Durban. She services her own clients and oversees others.

Fairheads contact centre got the nod from the industry in November last year when we were selected as finalists in the BPeSA Industry Awards in the Captive Contact Centre category. BPeSA (Business Processing enabling South Africa) hosts the awards annually to recognise and celebrate outstanding performance and excellence within the contact centre industry.  

Diarise the annual update on Fairheads Umbrella Beneficiary Fund and Fairheads Umbrella Trust later this year. We would love to see you there!

CAPE TOWN: Tuesday, 1 September 2015

DURBAN: Wednesday, 2 September 2015

JOHANNESBURG: Thursday, 3 September 2015