Legal Talk - From which date is pension interest calculated in divorce proceedings?

From which date is the pension interest to be calculated?

Should it be the date of separation or the date of divorce? These are the issues, which the high court in KZN had to consider in April 2023 in a divorce matter.

The facts briefly were the following: The couple married in community of property in 1993 and separated during December 2004. They both agreed that the marriage had broken down and that they had not lived as husband and wife from the date of separation.

The wife was a member of the Government Employee Pension Fund. The man was retrenched some years ago and he received an amount of R 609 455.14 as his pension pay-out. Both parties agreed that the bulk of the funds from the pension pay-out was used by the husband towards building the house in which he resides.

The court had to decide whether the wife was entitled to 50 % of the pension benefit which man received on his retrenchment and whether the man was entitled to 50 % of his wife's pension interest up to the date of divorce.

The wife claimed that her husband was not entitled to 50 % of her pension interest up to date of their divorce but that it must be limited to 50% up to the date on which they separated [which was in 2004].

The husband argued that even though they separated in 2004, he was entitled to 50 % of his wife's pension interest up to the date of the divorce in 2023. He said that when he received his pension pay out it went into the joint estate and the money was used for building his house.

The court found that for purposes of the division of the estate, as the parties were married in community of property, the value of the pension interest which the man received had to be added to the value of the other assets that formed part of the joint estate. For that reason, the amount which the husband received back in 2016 when he was retrenched formed part of the joint estate as they were still married at that time. Since the amount was already paid, the wife would be entitled to 50 % thereof but for practical reasons it would be taken together with all the assets in determining what the value of the estate is, which would then to be divided equally.

Regarding the date when the 50% is to be calculated, the court said that the man was entitled to 50% of Plaintiff's pension interest as at date of divorce not date of separation.

Section 7(8) of the Pension Fund Act, creates a mechanism in terms of which the pension fund of the members spouse is statutorily bound to effect payment of the portion of the pension interest (as at the date of divorce) directly to the non-member spouse as provided for in section 37 D(1)(d)(i) of the Pension Fund Act 24 of 1956 and section 21(1) of the Government Pension Law 1996. The court held that the man was thus entitled to 50 % of the pension benefit of his wife and it was to be calculated as at date of divorce, regardless of the date when they separated.

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