Death-in-service benefits
What benefits are paid on my death?
A death benefit is only paid if you die before the retirement age specified
in your employment contract.
Unless you have elected to reduce your death cover (see below) the benefit paid
to your dependants is the total of:
- 6 times your annual pensionable salary; plus
- The balance in your Retirement Savings Account
In addition, there is a further 1 times your annual pensionable salary that
will be paid from a separate Group Life Assurance scheme provided that you have
not already received a disability lump sum benefit from this arrangement. (Staff
on T2 conditions of service who are members of the UCTRF have cover of three
times their annual pensionable salary under this arrangement and do not have the
6 times annual pensionable salary cover mentioned above.)
To who is the benefit paid?
It is important to understand that, in terms of the Pension Funds Act,
the Trustees must allocate this benefit to those persons that were
financially dependent on you.
You should certainly fill in beneficiary nomination form indicating to the
Trustees to whom you want your death benefit to be paid. However, the Trustees
are not bound to follow your nomination; they must apply the money to those
parties that are financially dependant on you.
Click here for a copy of a beneficiary nomination form. The form may also be obtained from the Principal Officer.
How is my death benefit paid?
Your dependants can choose how much of the death benefit must be paid to them as
pension and/or a lump sum. Once they have received the benefit, your dependants
have no further claim against the Fund.
Can I reduce my death cover?
If you have 10 or more years' pensionable service, you have the option to
reduce your death cover. The Fund Rules require that your death benefit must
be at least 4 times your annual pensionable salary.
For example, if the balance in your Retirement Savings Account is 2 times
your annual pensionable salary, you can reduce your death benefit from the Fund
to twice your annual pensionable salary (i.e. your death benefit is then 4 times
your annual pensionable salary).
If you elect to reduce your death cover in this way then your Retirement
Savings Account will be credited with an additional contribution. Currently your
Retirement Savings Account is credited with 0,174% of your pensionable salary
for each 1 times annual pensionable salary you decide to reduce your death
cover. The Trustees will review this credit from time to time.
Can I increase my cover again at a later stage?
Only if the number of people dependent on you increases you may elect to
increase your death cover again. However, your death cover will only be
increased if the Insurer with whom the Fund has insured the death benefit is
prepared to increase your death cover. (The Insurer may ask you to go for a
medical examination so that it can assess whether you are in good health.)
The decision to reduce your death cover is a difficult one and there is a separate guide
Choosing your death cover dealing with the issues you should consider in this regard.
Important issues to note
- The Fund insures its death benefits and those provided by the separate Group
Life Assurance scheme. The Insurer will require members that have death cover in
excess of a certain amount to provide evidence of health. If you are affected by
this limit, you will be required to provide such medical evidence, as your
benefit is restricted to the amount that the Insurer pays.
- To qualify for the death benefit you must be actively at work on the first
day of your employment. This means no death benefit will be paid if you were
appointed by UCT, but never spent time at work.
- There are also specific policy exclusions that relate inter alia to
hazardous activities and pastimes. Full details of the exclusions that apply are
available from the Principal Officer.
- The separate lump sum death and disability scheme also has an option whereby
you can elect additional death and disability cover on a voluntary basis. These
voluntary benefits are not covered in this guide.
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