In terms of the legislative change to the GEP Law, the Orphans Pension has been replaced with a Child Pension as of 1 June 2018. To qualify for the Childs pension, only the member or pensioner needs to be deceased. This means that the surviving spouse and children can receive pensions at the same time.
In order to be considered for the benefit, the child must be a biological or adopted child of the deceased member or pensioner. Step children, or a child who was in the care of the member or pensioner, do not qualify for the benefit unless a child must be proven to be legally adopted or a biological child or the deceased member or pensioner.
An eligible child qualifies for child pension up to the age of 22, regardless whether or not the child is a student. If a child is disabled and fully dependant on the deceased member or pensioner, the child will qualify for the benefit until he or she passes away.
Child pensions are paid to the guardian until the age of 18, at which time the benefit must be paid to the major child pensioner directly. Once the child reaches the age of 18, the child must submit banking details in his or her own name as GEPF is not allowed to pay benefits due to a major child, into the account of another person. If GEPF is not furnished with the banking particulars of the major child, the benefit will be suspended until the banking details are submitted.
Child pensions are subject to tax, but most child pensioners will not be subject to the actual deduction of tax, as they earn less than the minimum tax threshold. The child pensioners are also subject to Auto Life Verification on a yearly basis, or will receive a Life Certificate if they do not pass the ALV verification. This is done to ensure that the child is still alive and entitled to the benefit.
In order for a child pensioner to qualify for a funeral benefit if he or she passes away, a child pensioner must still satisfy the existing funeral benefit requirements that is if a child passes away and he or she is between the ages of 18 and 22, the child must have been a fulltime student.
How is the benefit going to be calculated?
Child pension is calculated as a percentage of the pension the member would have been entitled to on the date of death, or the standard pension the pensioner would have been entitled to on the date of death.
This means that the percentage that is awarded to each child will depend on whether or not there is a surviving spouse and how many children there are.
What happens with disabled children?
Disabled children receive child pensions regardless of their age. The child must prove that he or she is physically or mentally disabled and not capable of providing for him- or herself financially. Once the pension has been awarded, it remains payable until the child pensioner passes away.
GEPF will perform auto life verification (ALV) once a year. If the ALV fails, a life certificate will be sent to the child. If the life certificate is not returned, the benefit will be suspended.
How must a child apply for the benefit?
A Child Pension application form (CHP1) available on the GEPF website must be completed to claim the benefit. Each child must apply separately for the benefit, using a separate CHP1 application form and attaching the documentation mentioned in the instructions.
How are payments made?
Payment to minors will be made to the bank account of the guardian of the child. Children between the ages of 18-22, must be paid to their own bank account.
The GEPF will notify the guardian and child to change banking details 3 months prior to the 18th birthday of the child. If the banking details are not changed, payment will be suspended. Section 21 of the GEPF Law prohibits us from paying benefits to a third party.
If a child is a major and cannot administer his or her own affairs, a curator should be appointed by the High Court and the Master of the High Court should issue an appointment certificate.
What happens with late claims?
If Child Pension has already been awarded, and another child claims and is approved, the benefits due to all child pensioners will be recalculated based on the amount of children claiming. The new child will only receive benefits from the date the claim is received. If the benefits of the other children have to be made less, that will be done from the date that the new claim is received.
If an over-payment was made to a spouse, that will be subject to the debt collection policy and process.
Are enhanced spouse pensions taken into consideration if a pensioner passes away?
No – child pensions are calculated as a percentage of the standard member or pensioner benefit. The reason for this is that the pensioner specifically pays for an enhance spouse benefit on retirement – not an enhanced child pension.
What happens if both the parents of a child passes on and both were members of the GEPF?
If both the parents of a child pensioner pass on and both were members or pensioners of the Fund, the child will qualify for a child pension from both parents, as long as all the qualifying criteria are met.
Is interest payable on Child pensions?
Yes – subject to the in “duplum” rule i.e. the interest can never be more than the monthly pension payable. Duplum rule simply means “double the amount.” “Duplum” is a common law rule that specifies that interest on a debt will cease to run when the total amount of arrear interest has accrued to an amount equal to the outstanding principal debt.
The calculation of the interest is based on the accounting period of each separate monthly annuity i.e. interest can only start accruing 60 days after the specific monthly payment becomes due.
This means that interest is calculated separately on each monthly pension, and the interest due on each will differ, unless the interest is equal or more than the monthly pension (in which case the in duplum rule applies and the child pensioner receives interest equal to the monthly pension.)
Is tax payable on the Child Pension?
Yes – the benefit is subject to tax. But if the child receives a benefit less than the tax threshold, there will be no tax deducted. If the child does not have a tax number, the GEPF will register the child as a tax payer with SARS and inform the child and guardian of the tax number.
Tax certificates will be issued yearly.
What about Life Certificates?
- Auto Life Verification will be performed for Child Pensioner exactly the same as with pensioners.
- If a Child cannot be verified as alive against Home Affairs, a life certificate will be generated and sent to the guardian or child. If the life certificate is not returned, the benefit will be suspended until the life certificate is returned.
What about Funeral Benefits?
Child Pensioner qualify for a child funeral benefit if they pass away. The standard funeral benefit rules will apply. This means the child who is between 18 and 22 must be a full time student to qualify for a funeral benefit.
Child Pensioners only qualify for standard child funeral benefits.
The GEPF pays annuities (child pensions) to the eligible children of members or pensioners who passes away on or after 1 June 2018.