She thought to herself, “Here, we’re in for a big job.”

The Director of Fairheads Benefit Services and her team had already been hard at work setting up a fund to benefit the dependents of miners who were members of the Masakhane Provident Fund. And as the death claims following the massacre started coming through, Gould and her team settled them.

Multibillion rand industry

An industry worth R19 billion, beneficiary funds and their predecessors, umbrella trusts, are unique to South Africa. The homegrown financial vehicles accept lump-sum payments from provident and pension funds on behalf of minor children whose parents have died. The trustees of these funds are tasked with ensuring the financial needs of the dependents are met, be it food, clothing, education, medical expenses and anything that benefits the minor child.

“Surviving in life with parents is difficult nowadays, without them it’s ten times worse. I often look at my own kids and feel blessed that I am there for them,” Gould said.

The trustees of these funds are tasked with ensuring the financial needs of the dependents are met, be it food, clothing, education, medical expenses and anything that benefits the minor child.

Purpose of retirement funds

The goal of pension and provident funds is so people don’t become dependent on the state in their old age, Gould explained. And in the case of death, their dependents should also not become reliant on the government. Hence every retirement fund has a board of trustees to ensure that all of the members’ dependents benefit equitably from the proceeds of the fund.

“That explains why you sign a nomination form when you join a pension or provident fund, so the trustees know how to distribute the money,” Gould said.

If there’s a nomination form, why then do we need beneficiary funds? “People have more children and forget to update the nomination forms or they get divorced and remarry. In South Africa there’s customary marriage where there’s more than one wife,” Gould said.

In such situations the trustees of the retirement fund must ensure that all the breadwinners’ dependents are catered for. They might also opt to nominate a beneficiary fund to administer the monies paid out if they feel the guardian looking after the dependants is not financially capable of ensuring the pay out lasts through to the child’s age of majority.