Pledged Pilar 2a in event of death

Hi Moneyguru,

I need some clarity in my unique situation.

Me and my husband bought an apartment together and pledged our respective Pillar 2As. Unfortunately my husband passed away. As a legal heir I am entitled to certain payout in case of death. However what I am not clear about is: would the payout be done/processed when Pillar 2a has been pledged.

Could you kindly help me here.

Thank you

Hi arunimakaul,

It depends on the specific terms and conditions of the pledge, as per your pension fund's statutes.

The standard model is to pledge your future old-age pension, disability benefits, and death benefits as collateral for the home loan. What this means is that if the person insured by the pension fund dies, the death benefits they get from the pension fund go to the bank to repay the loan. The excess may be paid out as a widow's pension.

But many pension funds have additional, extra life insurance above the basic widow's pension. Rules are also very different from one pension fund to another. The best thing you cando is contact your spouse's pension fund directly and ask. They can tell you whether you are entitled to a survivor's pension or lump-sum payout, and the exact amount you will get, accounting for a possible reduction in benefits due to pledging as collateral.