Q. 1. The Pensions
Funds Act 1956 ("Act") regulates pension funds in South Africa.
2. The object of the Act is to provide support for the dependants
of a deceased member upon his death. The support is provided by means
of lump sum payments and / or annuities.
3. A pension fund established in terms of the Act has separate
Juristic personality, and must comply with prescribed requirements including
registration, etc.
4. A contribution to a pension fund is deducted at source from
the employees salary and paid over to the fund by the employer. The employer
also makes defined contributions to the fund.
5. When the employee dies, the fund in accordance with its rules
but subject to the Act pays death benefits to the depe- ndents of the
deceased, normally the surviving spouse and minor children, who were dependent
on the deceased for main- tenance in his lifetime.
6. It is crucial to understand that in making payments of the death
benefits, the trustees of the fund exercise a discretion conferred upon
them in terms of the Act. They are empowered in terms of the Act to make
payment of the death benefits amongst the dependents in such proportions
as they deem just and equitable in the circumstances of the particular
case not withstanding any nomination made by the deceased.
Their decision is in terms of the Act subject to review by an appointed
adjudicator and ultimately subject to review by the High Court (Section
37C).
7. The question therefore arises whether the death benefits awarded
to the dependents of the deceased employee belo- ng to those dependents,
or whether the death benefits form part of the estate of the deceased.
The Act specifically provi- des that those benefits will not form part
of the deceased estate, and are not subject to attachment upon insolvency
of a person entitled to a benefit.
8. In my humble view, the death benefits belong to the dependents
of the deceased to whom they are awarded by the trustees of the pension
fund in question. The reasons for this opinion is that :
8.1 The pension fund is a separate legal entity established and
regulated by the Act ;
8.2 The trustees in awarding the death benefits are exercising a discretion
conferred upon them by the act in accor- dance with it's objects ;
8.3 The contributions which were deducted at source did not belong
to the deceased employee in this regard, see the interesting fatwa on
provident Funds written by your distinguished father (rahmatullahalai)
;
8.4 At best for the deceased, he had a claim against his employer
for the amount representing the contributions de- ducted from his salary
at source but this is not connected with the ultimate payment made by
the trustees of the pension fund which is sourced in the Act and which
regulates those payments designed for the support of the dependents only.
9. I would add that as regards the character of the death benefits,
I agree with the said Fatwa of your distinguished father to the effect
that they are halal.
10. Please examine the aforegoing carefully and let me have your
considered Fatwa on the question set out in paragraph7 above urgently,
as I have a case on hand. Besides, the issue is a common one and requires
clarity.
(M. S. Omar, South Africa)
A. In the light of the rules of the Pension Funds Act 1956 mentioned
by you it appears that the grants given to the depende- nts of a deceased
person from the Pension Fund are not subject to the rules of inheritence.
The amounts deducted at sou- rce from the salaries of the employees are
to be treated as a subscription to the Fund which no longer remain in
the owne- rship of the deceased person and perhaps he has no right to
claim it back during his life time. The principle is that only those properties
of a deceased person are subject to inheritance rules which he can claim
rightfully during his lifetime. Since he does not have the right to claim
any amount from the fund, therefore, it is not to be taken as left-over
property. The fund being a legal entity it can decide to pay this grant
to whomever it deems fit from the family of the deceased. In the terminology
of Islamic Fiqh this grant is a voluntary gift (Tabarru'), therefore,
it is not necessary it is to be distributed among all the legal heirs
according to their prescribed shares in the inheritance.
I have given judgement in a Shariah Appeal fixed before the Shariat Appellate
Bench of the Supreme Court of Pakistan with regard to the benevolent fund
which is very similar to the Pensions fund you have asked about. (A copy
is being sent to you by mail for your perusal and record).
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