Understanding the implications of Section 37C of the Pension Funds Act

Eleanore Hiralall | Attorney: Legal Services Division

Most employed South African’s would ordinarily belong to a pension / provident fund, which would require you to complete a beneficiary nomination form. 
Section 37C of the Pension Funds Act No. 24 of 1956 (“the Act”) regulates the distribution, payment and circumstances in which your benefits would be paid out to your nominated beneficiaries upon your death.


What is the objective of Section 37C?

  • The main objective of Section 37C is to ensure that those persons who were dependant on the deceased member during his/her lifetime are not left destitute after his/her death.

  • Why complete a Beneficiary Nomination Form?

    • The completion of a Beneficiary nomination form (“the form”) would assist the Trustees in identifying your beneficiaries / dependants; and
    • Completion of the form would also serve as a guideline to assist the Trustees in exercising their discretion in the distribution of your death benefits.

    Would my nominated beneficiary/ies automatically receive the benefit allocated by me?

    • In terms of Section 37C, the Trustees of a fund (“the Trustees”) are required to conduct their own investigations (including financial circumstances of your beneficiaries and the level of dependency they had on the member) and can make a distribution contrary to your wishes / your specified allocations.

    Instances when my nominated beneficiaries would not receive the share I specify

    • Prior to making any beneficiary allocations, the Trustees are required to conduct investigations which includes:
      • Identifying and tracing your beneficiaries / dependants;
      • Ensuring that benefit allocations are made in an equitable manner based on the particular circumstances of the beneficiaries; and
      • Determining the appropriate structure of payment to your beneficiaries.
    • Ultimately the Trustees have the sole discretion in determining the beneficiaries as well as the allocation and payment of benefits, taking into account the particular needs and circumstances of each beneficiary. 

    What role do the Trustees play?

    • Apart from an investigative role, the Trustees are required to uphold the provisions of Section 37C to ensure that a fair and equitable distribution of benefits is made.

    Does my provident/pension fund form part of my estate?

    • Death benefits do not form part of your estate. However, exceptions to the rule will apply in circumstances where you pass away leaving no beneficiaries / dependants and when your estate is insolvent.


    Notwithstanding your express wishes as stipulated in the Beneficiary Nomination Form of your pension or provident fund, Section 37C ultimately grants the Trustees an overriding discretion in awarding of your benefits.

    All employees subscribing to a pension/provident fund should be fully acquainted with the implications of Section 37C.