Centurion
+27 12 940 1947
Lytteltown Office Park, Building H, Shelanti Avenue, Die Hoewes
RANDBURG
+27 10 597 7810
Unit 4, Waterfront Office Park, West Ave, Ferndale, Johannesburg, 2194
WITbANK
+27 10 447 3676
5 Neven Street, Modelpark, Emalahleni
MIDDELBURG 
+27 10 597 6652
37 Walter Sisulu Street, Middelburg, Mpumalanga
Cape Town
+27 10 449 9756
8 Kloof Street, Gardens, Cape Town
Pretoria East
+27 12 819 7901
379 Queen Crescent, Lynnwood, Pretoria, 0081

The Divorce Act determines that a member’s pension interest in a retirement fund forms part of the member’s assets.  A retirement fund includes a pension fund, provident fund, retirement annuity fund or preservation fund. The effect of this is that it will be taken into account when calculating the division of the parties’ assets during a divorce.

During settlement negotiations, the parties can determine the portion that will be awarded to the non-member.  This will be noted in the settlement and same will be incorporated into the decree of divorce.  A common mistake made by parties representing themselves is that they fail to comply with the Pension Funds Act and the Divorce Act.  Failure to comply with the aforementioned acts results in pension funds refusing to pay the pension interest to the non-member.

ALSO READ: Is your customary marriage valid? Customary marriages in terms of the recognition of certain customary marriages Act 120 of 1998

Section 37D(4)(a) of the Pension Funds Act read together with Section 7(8) of the Divorce Act, sets out specific requirements with which a divorce order and/or settlement must comply to ensure payment to the non-member.  The following must be included in the order and/or settlement:

  • Specifically, refer to the non-member’s entitlement to the “pension interest”;
  • The pension fund must be identifiable;
  • The percentage of the “pension interest” or amount must be set out;
  • The fund must be specifically ordered to endorse its record and make payment of the “pension interest”.

A closer look at the above-mentioned requirement reveals the following:

Specifically, refer to the non-member’s entitlement to the “pension interest”

“Pension interest” with regards to a pension fund is the benefit to which a member would have been entitled in terms of the rules of the pension fund if the member would have been terminated on the date of divorce on his account of his resignation from his office.

In regards to a retirement annuity, “pension interest” means the total amount of that party’s contribution to the fund up to date of the divorce, together with a total amount of annual simple interest on the contributions.

The Divorce Act specifically referrers specifically to “pension interest” and it is therefore of the utmost importance that the order and/or settlement complies with the Act.

The pension fund must be identifiable

Identifying the pension fund seems simple, however, numerous pension funds refuse to make payments as parties fail to properly identify the pension fund.  The following must be included to identify the fund:

  • The name of the pension fund;
  • The member number and/or policy number;

The percentage of the “pension interest” or amount must be set out

The percentage or amount that should be paid to the non-member must be clear. In the matter of Areias v Momentum Retirement Annuity Fund and Another [2013] JOL 30007 (PFA) the settlement read as follows:

“It is recorded that policy number 62028677 in the name of MANUEL shall continue to be paid by MANUEL and that on maturity date the value thereof shall be paid out in equal shares to MANUEL and RITA.”

And

“It is further recorded that policy number 61971673 in the name of MANUEL shall continue to be paid by the said MANUEL and on maturity date in the year 2006 shall be paid out in equal shares to MANUEL and RITA”.

It was determined that the usage of the wording “equal shares” is not sufficient enough and the pension fund had no duty to pay the non-member.  One can argue that “equal shares” means 50%.  If the first requirement is taken into account the above fails to refer to “pension interest”. Thus it is not clear what should be taken into consideration when calculating the “equal shares”.

The fund must be specifically ordered to endorse its record and make payment of the “pension interest”

In the matter of Rampa v Sentinel Mining Industry Retirement Fund [2014] JOL 31450 (PFE) it was held that for a court order made in terms of the Divorce Act to be enforceable, it must specifically order the pension fund to pay the portion to the non-member.  

READ THIS: Major children and your duty to pay child maintenance

Conclusion

If the divorce order and/or settlement agreement does not comply with the requirements of the Divorce Act and Pension Funds Act a pension fund has the right to refuse payment. This can be rectified but requires a separate court application to amend the settlement agreement. This is an unnecessary application that has a cost implication that is avoidable by approaching an attorney firm to assist you with the settlement agreement. This will ensure compliance with all the relevant Acts.

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Posts

What is commercial law? A South African perspective

Commercial law, also known as business law or corporate law, is a branch of law that deals with legal matters related to businesses and commercial transactions. It encompasses a wide range of legal issues that arise in the conduct of business activities. Commercial law governs the rights, obligations, and interactions between individuals and entities engaged […]

Read More
What is labour law? A South African perspective

Labour law, also known as employment law or labor law, is a branch of law that deals with the rights, obligations, and regulations governing the relationship between employers and employees in the workplace. It is designed to protect the interests of both employers and employees and to ensure fair and equitable treatment in the workplace. […]

Read More
What is family law? A South African perspective

Family law is a legal practice area that deals with legal matters related to family relationships, domestic issues, and personal matters involving individuals and their families. It encompasses a wide range of legal issues that arise within families and domestic partnerships. Family law aims to address and resolve these issues while safeguarding the well-being and […]

Read More
BACK TO TOP
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram