Publications
Partners
We received several questions this month about the Government Employees’ Pension Fund (GEPF). They relate to the rights of a spouse and the beneficiaries regarding death claims. This does depend on whether the member died in service or after retirement.
WHO ARE THE BENEFICIARIES AFTER RETIREMENT?
THILO ASKS:
My dad retired last year and he passed away this year. He was going through a divorce, but it was not finalised. He nominated my sister and me as his beneficiaries for the remaining five years of his guaranteed pension. His wife will collect his monthly pension but now we find out that she is litigating for the balance of the five years. Can she still claim that?
CITY PRESS REPLIES:
When a member of the GEPF dies after retirement, there are two potential payments. The first is a spousal pension, of which the spouse will continue to receive 50% (or 75% if he selected that option at retirement).
READ: Money Makeover | Financial independence during retirement needs a good plan
The second is a lump sum paid to the beneficiaries if a member dies within five years of the retirement date. The beneficiaries will receive the balance of the annuity payment up to the end of the five-year period as a cash lump sum. This is paid to the nominees and/or dependants.
She does qualify for the spouse pension, as the divorce was not yet finalised. However, the pension fund trustees can still consider an application if a legitimate child was excluded or if the spouse was unfairly left out. This gives the trustees some discretion, but it is unlikely the spouse would receive the full balance of the lump sum if your father nominated his children.
This is an example of how benefits are calculated in retirement: Jack retired from the GEPF and died 36 months after his retirement. At the time of his death, he was receiving an annuity of R120 000 per year (R10 000 per month).
The fund paid out the following benefits:
Step 1: Balance of payments of Jack’s annuity is guaranteed for five years, excluding the R360 supplementary amount. Therefore, his beneficiaries received a lump sum payment of R231 360 – that is R10 000 less R360 multiplied by 24 months.
Step 2: Jack’s spouse will receive a monthly income of 50% of the annuity that was payable to him before his death – R120 000 divided by two – that is R60 000 per year (or R5 000 per month).
WHO ARE THE BENEFICIARIES BEFORE RETIREMENT?
LEBO ASKS:
My husband died last year. He was still working and was a member of the GEPF. He did not nominate me, as his spouse, only his sister-in-law and niece. Neither of them was financially dependent on him. What is going to happen?
CITY PRESS REPLIES:
If a member dies in service, the trustees must consider all the legal and financial dependants, irrespective of the nomination form.
A financial/legal dependant includes:
- A spouse. In the case of a customary marriage, if there are two valid spouses, both will get an equal share of both the gratuity and annuity.
- A child aged under 18, or a child who is still receiving financial support, such as tuition.
- A parent who is receiving financial support.
A financial dependant does not include:
- An adult child who is not receiving financial support from the member.
- A former spouse or partner who has not received any financial support, and financial support is not stipulated in the divorce agreement.
- Family members who are not receiving financial support from the member.
IS MY WILL VALID?
CANDICE ASKS:
I have drawn up my will with a template I found online via Legal Aid. If I have my will signed by myself and my two witnesses, is it valid or do I need to get it certified or signed by a commissioner of oaths?
CITY PRESS REPLIES:
In order for a will to be valid, it only needs to be signed by you (the testator) and two witnesses who are not beneficiaries in the will.
READ: Money Makeover | How to stop the debt cycle
However, it is important to ensure that someone knows where to find your will.
You can make a copy of the will to leave with someone else, such as an adviser. In that case, you would need to get the copy of the document certified by a commissioner of oaths.
HOW MUCH WILL I PAY A LAWYER TO CANCEL MY MORTGAGE?
SAUL ASKS:
I took a bond out in 2017 and paid off the home loan early this year. I intend to cancel the bond. In terms of cancellation fees, I read that it would cost about R4 500. Does the bank appoint the attorney? Are there two sets of attorneys involved, like when you purchase a property?
CITY PRESS REPLIES:
When you purchase a house, there are two sets of legal actions – one is the conveyancer who transfers the house to your name. The buyer pays that fee.
Then there is the attorney who registers the mortgage of the property. The buyer also pays that fee.
When you settle the bond, you only have the attorney fee to cancel the mortgage of the property. This attorney is normally bank-appointed.
