MONEY
WHAT HAPPENS TO MY RA WHEN I DIE? W
hile still alive, the
which in most cases means that
retirement annuity
the benefits will be paid out to
(RA) member will be
parties.
your appointed beneficiaries
• Step 2: Determining whether
the sole beneficiary of its benefits.
and financial dependants in
or not they are/were truly
“However, if you were to pass away
compliance with the act, without
dependant on the deceased
before accessing your RA benefits,
attracting any estate duty or
on date of allocation of the
then the total fund value becomes
executors’ fees.”
benefit or would have become
payable as a death benefit, of
According to Section 37C of the
dependent had the deceased
which, under current legislation,
Pension Funds Act, there are three
the first R500 000 is tax-free with
types of beneficiaries that may
the balance of the funds taxed
exist on an RA:
allocation of the money that is
according to a sliding scale. If you
• Legal dependants
not passed away.
available. In this process you
• Step 3: Making an equitable
are already drawing a monthly
would include spouses,
will normally find that trustees
sum the availability of any value
fiancées, children (born
would also consider other
and to be born) or parents.
allocations such as the terms of
to be paid to beneficiaries will exclusively be dependent on the
• De facto dependants
a will or other assurance. Minor
type of annuity or pension that
based on the facts of the
children could receive more
was purchased,” says Johan Botha
situation this could be brothers
than major children; some
from Aon South Africa’s Employee
or sisters, their children or a
dependants might be excluded
Benefits division.
third party that the member
due to the greater need of
is supporting financially.
others based on the amount
“According to the Income Tax Act of 1962, an RA is excluded
• Nominees
that is available for distribution
from a person’s estate at the death
a person you would like to
of the member, which is why
nominate as beneficiary but
the nomination of a beneficiary
who is not necessarily
who you support financially
on your retirement annuity is
a dependant.
and who relies on you for their
The Trustees of a retirement
livelihood and daily living costs
vital. The process of allocating
42
• Step 1: Identifying all these
for example. It is very important to consider
benefits will be driven by Section
annuity fund will then be tasked
when you complete your RA
37C of the Pension Funds Act,
with:
nomination form. •
SILVER DIGEST //SUMMER 2019
