The pensions industry continues to be impacted by regulatory changes – these not only include enhanced financial reporting requirements and actuarial guidelines, but an increased focus on governance, risk management, compliance requirements and consumer protection. In this article we discuss the role of the guardian’s fund, the importance of protection of pension benefits and the relationship between the guardian’s fund and pension funds. To properly administer benefits, pension funds, board members and principal officers need to be clear on the rights and responsibilities of members and other dependents in particular minors. A child’s best interests are paramount in every matter concerning the child.[1]

What is the Guardian’s Fund?

The guardian’s fund was established to protect and manage funds on behalf of certain people such as minors, those who are not able to manage their own affairs or those absent from Zimbabwe or who cannot be found. The money held in the guardian’s Fund generally comes from inheritance and deceased estates and the Master of High Court administers it in accordance with the Administration of Estates Act [Chapter 6:01] Act.

The law governing guardian’s Funds in Zimbabwe is embodied in section 97 of the Administration of Estates Act [Chapter 6:01] where subsection 2 of the provision provides that:

“All moneys received by the Master under section fifty-one, sixty-one, eighty, ninety-two and ninety-three or otherwise shall form and become part of the said Guardian’s Fund and due and proper accounts shall be opened in respect thereto.”

Section 51 of the Act expressly provides that where any money from an estate has become due to any minor, mentally disordered or defective person or person absent from Zimbabwe and that person has no guardian, tutor, curator or lawful representative the executor of the estate shall pay the money to the Master through depositing it into an account and in addition the Master may permit the executor to withdraw money for the maintenance of the minor, mentally disordered or intellectually handicapped person or person absent from Zimbabwe from time to time.

Furthermore, section 61 of the Act articulates that a surviving spouse who has been appointed as executor testamentary of the deceased spouse’s estate shall pay the inheritance of the minor children or descendants of the deceased spouse into the hands of the Master or in such a manner as the deceased spouse has directed.

Section 80 of the Act provides that the Master is to demand, recover and receive payment of any money which is due and payable to a person absent from Zimbabwe by the executor of any deceased person or by trustee of any insolvent estate.

Section 92 of the Act provides that every tutor dative and curator dative or curator bonis is to pay over to the Master all moneys belonging to the person or estate under his guardianship as soon as he receives it unless the money is needed for payment of debt which is due for the estate or if it is needed for the maintenance of such person.

Lastly, section 93 of the Act provides that any tutor testamentary or curator nominated may pay to the Master any money belonging to the person or estate under the guardianship of such tutor or curator except where the tutor or curator has been directed not to do so by the person who appointed him.

Consequently therefore, the above is an indication that a Guardian’s Fund consists of any money which is received by the Master in terms of the above-mentioned sections of the Administration of Estates Act and is received for the sole purpose of administering it for those people referred who are incapable of administering it themselves.

How is it Administered?

The guardian’s Fund is administered by the Master of High Court. According to section 101 of the Act, all moneys paid to the Master for the purpose of being placed on the Guardian’s Fund shall be paid into an account with a commercial bank registered under the Banking Act [Chapter 24:26] in the name of the person to which the money belongs to and if the name is not known then in the name of the estate from which the money is derived. The money is only payable to a person entitled by law to receive it. The Master can pay and apply the whole or any part of such amount for the maintenance, education or other benefit of such minor, mentally disordered or defective person who is entitled to benefit from the Guardian’s Fund. All moneys in the guardian’s Fund which has not been claimed after 30 years of being paid to the Master, shall be paid into the Consolidated Revenue Fund and shall be considered to have prescribed.  

How the Guardian’s Fund Relates to Pension Funds

An unclaimed benefit is any lump sum or pension benefit that is due to a retirement fund member (or his/her beneficiaries) and has remained unclaimed for a period of time. Members of a fund may leave without claiming the benefits due and payable to them for a number of reasons which include apathy or not being aware that they are entitled to a benefit. This results in large amounts of money lying dormant in pension funds waiting to be claimed.

According to the IPEC Pensions Industry Report [2];at the end of March 2023, pension funds held unclaimed benefits assets amounting to ZW$15 billion on behalf of 105 726 principal members and beneficiaries. It was also observed by the same report that unclaimed benefits with more than 10 years amounted to ZW$8 billion during the period under review. In terms of section 99 of the Administration of Estates Act, once benefits held by a pension fund have remained unclaimed for a period of 5 years, such moneys should be transferred to the Guardian’s Fund. The provisions of section 99 are set out below;

99 Master to control moneys in hands of agents for person whose whereabouts are unknown

(1) Every person, other than a deposit-receiving institution referred to in section one hundred, carrying on business within Zimbabwe shall in January in each year prepare as hereinafter provided a detailed statement of all moneys amounting to one hundred dollars and upwards which were in his hands or in the hands of an agent on his behalf within Zimbabwe on the 31st December last past, which were not his property or subject to any valid lien and which have remained unclaimed for a period of five years or more by the rightful owner.

(2) That statement shall as far as practicable set forth the full name and last known address of each of the owners aforesaid and shall be signed by the person carrying on business as aforesaid or some responsible person

on his behalf, and shall be supported by an affidavit in the form contained in the Third Schedule.

(3) Such statement and supporting affidavit shall, not later than the 31st January in each year, be forwarded to the Master, together with all moneys detailed therein; and all such moneys shall be held by the Master in the

Guardian’s Fund for account of the rightful owners.

(5) If any person fails to furnish the statement and affidavit mentioned in this section or to pay into the Guardian’s Fund any moneys which under this section ought so to be paid, as and when the same ought respectively to be furnished or paid, then every person having the custody or control of such moneys or, in the case of an association of persons other than a partnership, the secretary and every director thereof within Zimbabwe or, in the case of a partnership, every member thereof within Zimbabwe, shall be guilty of an offence

and liable to a fine not exceeding level seven or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment

The above provisions are peremptory and failure to comply with same constitutes an offence attracting a fine or imprisonment on the pension fund, the pension fund administrator, the pension fund board or the principal officer.

Can The Master of High Court Direct Pension Funds to pay benefits due to Minors to the Guardian’s Fund?

In instances where the pension fund is holding any money or benefits due to a beneficiary who is a minor, the question is whether or not the Master of High Court can direct that these funds be paid to the guardian’s Fund. The principal law regulating pension funds is the Pensions & Provident Funds Act [Chapter 24:32] (Pensions Act) and it makes no provision regarding this.

One might then want to rely on the provisions of the Administration of Estates Act discussed above but on closer scrutiny, none of the provisions provides that a pension fund ought to transfer any benefits that are due to a minor to the guardian’s Fund, unless it has been holding the benefits for a period of more than five years. In that instance, there is nothing barring the Master of High Court to direct that the unclaimed benefits be transferred to the Guardian’s Fund.

A child’s best interests are paramount in every matter concerning the child^[3] and this means pension funds must properly administer any funds due to the minor in order to meet the pension promise.

Importance of Protection of Pension benefits

Taking into consideration the purpose of pension Funds, which is to provide benefits to its members and/or their beneficiaries, it is of paramount importance that these benefits be protected. The Pension Act does not provide for the protection of pension benefits from judicial attachment, insolvency or death. This is unlike in South Africa, where the Pension Fund Act in section 37A, 37B and 37C protects the benefits from the aforementioned.

Statutory Instrument 323 of 1991 Pension and Provident Funds Regulations, 1991 provided for the protection of pension benefits particularly from death through the powers of the Trustees. However, statutory instrument 323 of 1991 being regulations that was promulgated in terms of the now repealed Pension and Provident Fund Act (Chapter 24:09), fell away on the 2nd of September 2022. Thus, what obtains is that aside from the Constitution of Zimbabwe[4] there is no law that provides for the protection of pension benefits. It is therefore our considered view that there is a fundamental gap in the law regarding the protection of pension benefits.

Section 23 (1) (b) of the Pensions Act provides below;

(1) The board of every fund shall be responsible for directing, controlling and supervising the operations of the fund in accordance with this Act and the rules of the fund, and for that purpose the board shall—

(b) ensure that the rights and benefits of members and beneficiaries of the fund are protected and that such members and beneficiaries are adequately informed of their rights, benefits and duties in terms of the rules of the fund;( emphasis ours)

This legislative framework relating to the guardian’s fund must be understood to ensure protection of rights and benefits of members and beneficiaries. To properly administer benefits, pension funds, board members and principal officers need to be clear on the rights and responsibilities of members and other dependents in particular minors. A child’s best interest are paramount in every matter concerning the child.^[5]

[1] Section 81 (2) of the Constitution.

[2]   IPEC Pensions Industry Report Quarter ended 31 March 2023

[3] Section 81 (2) of the Constitution.

[4] section 71 which provides protection against extinction or diminution of a pension benefit

[5] Section 81 (2) of the Constitution.