Where a beneficiary is a minor, the trustees must determine the most appropriate mode of payment. Section 37C(2)(a) provides that payment to a beneficiary fund is deemed to be payment to the dependant. What this means is that the trustees have two options:

Payment to the surviving guardian

This is the default position. Paying the benefit to the minor’s legal guardian (typically a parent), who administers the benefit on behalf of the child until majority. Departure from this position requires good cause – specifically, a reasonable apprehension that the guardian may not appropriately safeguard the benefit.

Payment to a beneficiary fund

A beneficiary fund administers the benefit on behalf of the minor, typically releasing funds periodically for maintenance, education and related expenses until the child reaches majority.

Importantly, the board’s obligations extend beyond merely selecting where to make payment. It must:

• properly investigate and identify all dependants;
• determine an equitable allocation; and
• select an appropriate mode of payment based on a fact-specific inquiry.

A failure to properly assess the guardian’s capacity renders decisions susceptible to challenge and reversal.

A common (and increasingly risky) approach adopted by boards is to channel minor beneficiaries’ benefits into beneficiary funds as a default safeguard. The Pension Fund Adjudicator’s (Adjudicator) decision in Jumba v Auto Workers Provident Fund [2025] 3 BPLR 53 (PFA) confirms that this approach is legally flawed. Payment to a guardian is the starting point, and trustees must justify any decision to depart from it..

Jumba reaffirms that the inquiry must be fact-specific, documented and centred on the child’s best interests.

Key facts

Ms Jumba was the life partner of Mr Mfaxa (the deceased), a member of the Auto Workers Provident Fund, who passed away on 10 April 2022. Upon his death, a death benefit of R274,482.24 became available for distribution.

The fund’s board of trustees initially allocated 25% of the benefit to Jumba, with the remainder split between the couple’s two minor sons.

Following the emergence of new information indicating that the deceased had additional children, the board revised the allocation: Jumba’s share was reduced to 5%, her two sons each received 20%, and the balance was distributed among the other dependents.

The board further decided to pay the children’s shares into a beneficiary fund rather than directly to Jumba in her capacity as their guardian.

Jumba objected to this decision, contending that the fund had failed to properly assess her ability to administer the funds on behalf of her minor children. She also pointed out that lump sum payments had been made to other beneficiaries without similar restrictions.

The Adjudicator set aside the board’s decision and directed the fund to assess the guardian’s capacity and, if appropriate, pay her directly.

Where the fund failed

The Adjudicator identified fundamental defects in the board’s decision-making:

• No proper investigation into the guardian’s financial capability.
• No evidence of risk or unfitness.
• Unsubstantiated reliance on the guardian’s alleged consent to make payment to the beneficiary fund.
• Inconsistent treatment of beneficiaries.
• A failure to apply a fact-specific enquiry.

What trustees must do

Before deciding on the mode of payment, trustees must:

• Conduct a proper, documented assessment of the guardian.
• Apply the best interests of the child as the overriding standard.
• Identify objective risk factors (if relying on a beneficiary fund).
• Ensure consistency across beneficiaries.
• Retain clear evidence supporting the decision.

Key takeaway

The Adjudicator has drawn a clear line: beneficiary funds are not a default risk management tool – they are a justified exception. Absent clear and documented grounds, trustees must pay the guardian.