Question:
Can someone claiming to be “common law wife” be ceded a retirement annuity policy, and claim the benefits?
Answer:
Beverley,
A retirement fund/retirement annuity policy cannot be ceded to another person; the proceeds of the fund must flow to the fund member (subject to allowable deductions under the Pension Funds Act). Allowing cessions would give rise to all kinds of tax avoidance opportunities, and potentially prejudice the fund member and his/her financial dependents.
If the member passes while still a member of the fund, the fund proceeds do not form part of the deceased’s estate. Instead, the Trustees of the fund will allocate the funds according the member’s nomination form, BUT only after providing for all financial dependents (any person who has been reliant on the member for financial support). A common law wife living with the member would usually be considered as financially dependent, and would therefore share in the fund proceeds. The discretion to determine who is financially dependent on the member, and how the funds are to be allocated, rests entirely with the trustees of the fund.
