Legal Talk

The South African Law Commission deliberated the matter and found that even though the retirement fund benefits of a member could not be immediately available on divorce, it did in fact form an important part of the assets of the member's estate and the non-member spouse had the right to share in the retirement fund benefits of the member spouse. The member's right to such benefits was referred to as the member's "pension interest".

Consequently in 1989 there was an amendment to the Divorce Act, which stated that a "pension interest" would now be deemed part of the assets on divorce. The result of that amendment meant that on divorce, either spouse now has a claim against the pension fund of his or her spouse. A court would be empowered to order that the non-member spouse be paid out a portion of the member spouse's pension fund. 'Pension interest' is defined as every type of fund except a preservation fund. 'Pension interest' is:

Pension and provident fund -The benefits to which a member would have been entitled to in terms of the rules of the fund if his/her membership had terminated, due to resignation, at the date of the divorce. Retirement annuity-The sum of the member's contributions to the fund up to the date of divorce plus simple annual interest at the prescribed rate. Preservation fund -The benefit a fund member would receive if his/her membership were notionally to terminate on the date of divorce.

If a couple is married in community of property, the pension interest of the member spouse is considered as part of the joint estate. The non-member spouse is entitled to claim 50% of the pension interest of the member as at the date of the divorce. If a couple is married by ante-nuptial contract with the accrual system, the value of the spouse's pension fund is taken into account in order to determine the value of his/her estate.

If the couple were married by ante-nuptial with accrual but if they excluded the pension benefits in their ante nuptial contract, then the pension interest would not be part of the estate. In 2007 the Pension Funds Act was amended to include the 'clean-break principle' in relation to a divorce. This means that a member spouse who is married in community of property has the right to receive immediate payment or transfer of the portion of the other spouse's pension interest on divorce.

If the fund is not properly cited in the divorce pleadings the court will not be able to make any such order, on divorce. For that reason, it's important to ensure that your attorney is skilled in divorce proceedings so that the fund is correctly cited to ensure that the court can indeed make the appropriate order regarding the pension interest of the member spouse.

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