Where the board of a pension fund makes a distribution under section 37C(1)(a) of the Pension Funds Act 1956, the distribution must be made according to the circumstances at the time of the distribution and not at the date of death of the deceased member of the fund.
The fund had distributed part of the benefits to the mother of the deceased to the prejudice of his estranged wife and children. The mother had died four days before the decision was made. Despite this, the pension fund paid out the money to a bank account to the benefit of her daughter (deceased’s sister) who had not been part of the original distribution.
The Supreme Court of Appeal after a careful analysis of the tenses used for the verbs in section 37C found that there was no justification for reading into the definition of ‘dependent’ the qualification ‘at the date of death of the member’.
The language of the section and the purpose of the section which is to benefit people entitled to support, means that it is the date of the distribution that is relevant. The fund has 12 months to trace dependants. The situation can change during this time in many different ways (the spouse could remarry, children could become self-supporting, dependants might die, etc).
It was held that the approach of the board was not sensible. The purpose of section 37C is to provide some protection for dependants, both existing and potential. The obvious time at which decisions should be taken in that regard is when the determination is made. At that stage the board will have completed its enquiries and been in a position to assess the relative present and future needs of members of the class of dependents it has identified. The persons who benefit must be beneficiaries at the time the distribution is made. The amount was reallocated to the surviving wife and children of the deceased.
The case is Fundsatwork Umbrella Pension Fund v Guarnieri and Others.
