Those you name as beneficiaries of your retirement annuities may not necessarily be the ones who benefit from the policies when you die.
The trustees of your retirement fund are obliged to look after your dependants and the beneficiaries you name will not automatically be entitled to benefits.
This was highlighted in a pension fund complaint brought before John Murphy, the pension funds adjudicator recently.
Gareth van der Merwe, who took out three retirement annuities with Southern Life, wanted his divorced wife and two children to receive the death benefits from the policies.
Shortly after his divorce he started a relationship with another woman, and lived with her for nine years up until his death.
On his death, Southern Life decided to distribute the death benefits under the policies equally between the children and Van der Merwe's common law partner.
The first wife was left empty handed, despite being named as a beneficiary in the policy contracts.
The reason, which Murphy describes as "a regrettable lapse", is that Van der Merwe failed to confirm his beneficiary nominations with Southern Life. He needed to do so, because of a change in law in June 1989, which ushered in greater protection for dependants.
Under the amended law dependants are given equal or even greater protection than nominated beneficiaries and any nominations made in policies before June 1989 are invalid.
So, if you nominated beneficiaries before this date, you need to re-nominate them. You must notify your life assurer of your beneficiaries in writing.
In Van der Merwe's case, Murphy upheld Southern Life's decision, saying that the life assurer had properly exercised its discretion in distributing the money to the children and common law wife.
Murphy says while there may have been some merit in the argument that Van der Merwe's common law wife was not dependent on him because she earned an income, if she was legally married to him, she would have been regarded as a dependant in terms of the law, irrespective of her financial situation.
She had lived with Van der Merwe for a long time and nursed him until he died. They shared household expenses and developed a mutual dependence.
Murphy says the intention of the Pension Funds Act is to place a common law spouse and same sex couples in the same position as a legally married spouse.
