Beneficiary Funds

If you are a member of a retirement fund (a pension, provident, or retirement annuity fund), it is important to know that Section 37C of the Pension Funds Act gives the Trustees of the Retirement Fund the discretion to pay death benefits of anyone who is financially dependent on you into a Beneficiary Fund (see link under “Public Education for more about Beneficiary Funds).

Beneficiary Funds have an education focus

The use of a Beneficiary Fund is particularly relevant for minor children whose guardian or caregiver may lack the financial astuteness to invest and manage a lump sum death benefit in the best interests of a minor child. The main focus of a Beneficiary Fund is to invest the money such that the child can complete his or her education. Once the assets are in a Beneficiary Fund, the fiduciary duty passes on to the Trustees of the Beneficiary Fund.

If you are a Trustee of a retirement fund, ask yourself whether the fund that you are responsible for deals with a Beneficiary Fund with the requisite level of trusteeship.

Public Education

What is a Beneficiary Fund?