By TKay Nthebe
Being a retirement enthusiast, a conversation I believe we need to have more of as members of retirement funds is the importance of completing beneficiary nomination forms. Because the consequences of NOT completing and updating one can be dire, it is important that members take responsibility of their financial affairs. This week’s article discusses reasons why it is important for members of retirement funds to complete beneficiary nomination forms.
What is a beneficiary nomination form?
A beneficiary nomination form provides members of retirement funds the opportunity to nominate who will receive benefits upon their passing. According to section 32 of the Pension Fund Act (PFA) of 2019, retirement benefits do not form part of the member’s estate. What does this mean for you as a member of a retirement fund?
In the event of your death, your retirement benefits will be excluded from your estate and will be distributed according to the beneficiary nomination form. Members of retirement funds therefore have a responsibility to nominate their beneficiaries, submit completed forms to pension funds administrators and update the forms annually. Because a beneficiary nomination form is binding, the board of trustees have a responsibility to ensure the member’s interests are protected.
Who is a beneficiary?
A beneficiary according to the PFA is any person e.g., spouse, children, or other financial dependents who is entitled to receive a benefit from a pension fund according to the rules of the fund and the PFA should you die.
Consequences of not completing of a beneficiary nomination form
The question Basotho often ask is ‘what happens should I die without an updated beneficiary form or die without one?’
Where a member had a beneficiary nomination but hadn’t updated it and dies, the death benefits will be paid to the nominated beneficiaries listed on the last form on record. In the case where a member of a retirement fund dies and a beneficiary nomination form does not exist, the board of trustees has a responsibility to investigate and determine who the deceased member’s dependents are before paying out the death benefits. Upon verification by the board of trustees, the death benefits will be distributed to the dependents of the deceased member.
I regularly encourage Basotho to read and familiarise themselves with pension laws, rules of their funds and take responsibility of their financial affairs. By completing and updating your beneficiary nomination form, you effectively decide who you’d want to benefit from your benefits should you pass away because the beneficiary nomination form is binding.
If you haven’t completed or updated your beneficiary nomination form, please speak to your human resources office, or contact the Employee Benefits team at Alliance Insurance at www.alliance.co.ls