Widow fights R768,000 death benefit allocated to mother-in-law after R7.6 million payout

Ask AI 5minWidow wins challenge to Telkom fund’s 10% death-benefit allocation.

A widow has successfully challenged the allocation of R768,407 from her late husband’s R7.6 million death benefit to her mother-in-law, with the High Court finding that the Telkom Retirement Fund failed to provide sufficient evidence to justify the payout.

The North Gauteng High Court in Pretoria dismissed the fund’s application to overturn a determination by the Pension Funds Adjudicator, which had set aside the 10% allocation to the deceased’s mother and ordered the fund to conduct a fresh investigation.

Acting Judge Van der Merwe found that the fund had relied on unverified information and speculative assumptions about the 77-year-old woman’s potential future need for frail care.

The court ordered the fund to reassess the amount allocated to the mother, while confirming that she could qualify as a future dependant of her late son.

The dispute followed the death of a Telkom employee on October 22, 2022, leaving a death benefit of R7,684,069.95 payable under the Pension Funds Act.

The fund identified four dependants: the surviving spouse, the couple’s two minor children and the deceased’s mother.

Because the deceased had not submitted a beneficiary nomination form, the fund distributed the benefit as follows: 50% to his widow, 20% to each of his two children and 10% to his mother.

The mother received a net lump sum of R633,137.32 in January 2024, equivalent to R768,407 before tax. She later donated R100,000 to each of her grandchildren.

The widow challenged the allocation, arguing that the fund had failed to establish the extent of her mother-in-law’s financial dependency and whether the amount awarded was justified.

After the Pension Funds Adjudicator initially set aside the allocation in December 2024, the fund conducted a further investigation but reaffirmed its decision in February 2025.

The widow lodged another complaint, leading to a second determination in July 2025 that again set aside the allocation and directed the fund to investigate the matter properly.

The fund subsequently approached the High Court seeking to overturn that decision and reinstate the 10% share.

The judgment detailed the financial circumstances of the deceased’s mother, who was a widow living in a retirement village.

Information submitted to the fund indicated that she received approximately R15,475 a month from her own pension and her late husband’s pension. Her monthly expenses were estimated at R14,998, leaving a surplus of about R477.00.

The fund argued that she might require frail care in the future, potentially costing R20,000 a month, and that the death benefit could provide for this eventuality.

However, the court found that the fund had obtained no medical evidence establishing that she had a condition requiring frail care or was likely to need it.

There was also no actuarial calculation or capital-needs assessment to determine how much money would be required to cover potential future care costs.

Furthermore, the fund relied on an assertion by the deceased’s brother that he could not financially support their mother, without obtaining documents to verify his circumstances.

The fund had also failed to investigate whether the estate of the mother’s late husband could provide additional financial resources.

Judge Van der Merwe found that the omissions were significant, given that the allocation reduced the amount available to the surviving spouse and the two minor children, whose needs had been established.

The judge said the fund was required to base its decision on verified evidence rather than assumptions.

Although the mother’s limited monthly surplus indicated that she had limited financial means, the court found that this alone did not justify allocating R768,407 to cover a speculative future frail-care requirement.

The court considered section 37C of the Pension Funds Act, which requires retirement funds to identify the dependants of deceased members and distribute death benefits equitably.

Judge Van der Merwe said pension funds had a duty to investigate dependants’ circumstances and ensure that the information used to determine allocations was accurate.

While a fund’s board has wide discretion in distributing death benefits, that discretion must be exercised lawfully and on the basis of credible evidence.

The judge also considered whether the Pension Funds Adjudicator had wrongly assessed the mother’s claim as one of existing financial dependency rather than potential future dependency.

The court accepted that the distinction was relevant because the law recognises a person who would have become legally entitled to maintenance from a deceased member had the member survived.

The judge found that the mother could qualify as a future dependant, given her age, limited monthly surplus and the possibility that she might eventually need financial assistance.

However, that did not automatically justify the amount allocated to her.

The court said the fund had to establish a rational connection between the mother’s probable future needs and the amount awarded.

The widow proposed that the mother’s allocation be reduced to 2% if the court decided to substitute its own decision. The fund, meanwhile, sought to retain the original 10% share.

The court rejected both proposals, finding that the available evidence was insufficient to determine a fair and rational percentage.

It ruled that setting a new allocation without the necessary financial, medical and actuarial evidence would repeat the same error that undermined the original decision.

The matter was therefore referred back to the fund for a fresh assessment of the amount, if any, that should be allocated to the mother.

The investigation must consider verified evidence of her probable future maintenance needs, whether other family members can contribute towards her support, and the financial circumstances of all the dependants.

The court directed that the mother’s status as a potential future dependant should not be revisited during the reassessment.

The fund’s application was dismissed, the Pension Funds Adjudicator’s July 2025 determination was confirmed subject to adjustments to the compliance deadlines, and the fund was ordered to pay the widow’s legal costs, including counsel’s fees on scale B.