Legal Articles

When it comes to divorce and retirement funds in South Africa, it’s imperative that the retirement fund clause in a divorce settlement agreement is drawn up by a divorce attorney.

This is simply to ensure that the retirement fund in question does not reject a claim due to a poorly drafted clause. The only way to rectify this would be to make a substantive application to the court.

Pension Funds Explained

The term “pension fund” is used as a generic name for all the different types of retirement funds that fall within the scope of the Pension Funds Act.

It is also used to describe a particular type of pension fund in which a minimum of two thirds of the retirement benefit must be taken as an annuity.

*An annuity is a series of payments made at equal intervals

There are other types of pension funds in South Africa:

• Provident funds where the member is permitted to take the entire benefit in cash
• Retirement annuity funds for retirement plans outside of the workplace environment
• Preservation fund

Benefits from pension funds can be transferred to any one of these.

Divorce and Retirement Funds in South Africa

The act of dividing up pension and/or retirement funds in a divorce settlement should never be rushed to avoid the rejection of settlement agreements based on incorrectly drafted clauses.

The allocation of unaccrued pension benefits to a non-member spouse after divorce is regulated by the Divorce Act and the Pension Funds Act 24 of 1956.

Only when a husband, wife or partner in a civil union is still a member of the fund can he or she claim under the Divorce Act.

After he or she exits from the fund as a result of early withdrawal or retirement, the benefit will accrue to him or her. In this case, there is no longer any unaccrued benefit or pension interest.

Should the benefit accrue before the date that the divorce is finalised, it will be dealt with in the same manner as any other asset in the joint or separate estate.

Where couples are either married in community of property or in a civil union in community of property, each spouse or partner will have a claim against the other spouse or partners pension fund which equates to half of the pension interest on the date of divorce.

Matrimonial Property – How do the Marital Systems Affect Retirement Fund Claims

Marriage in Community of Property

The pension interest of each spouse will form part of their joint estate. The spouse who is not a member of the fund will be entitled to claim a total of 50% of the members pension interest as of the date the divorce is finalised.

Marriage Outside Community of Property with Accrual

Couples married outside of community of property with accrual, the spouse’s pension fund value will be considered before determining the value of his or her estate for accrual calculation purposes.

Marriages Outside Community of Property without Accrual

Each spouse will retain their own separate assets and will not be shared unless a redistribution of assets is ordered by the court in terms of Section 7 of the Divorce Act. In this case, the pensions of each spouse will be shared according to the redistribution order. It may also happen that spouses agree to share their pension interest in a mutual settlement agreement.

For marriages outside of community of property without accrual after the 1^st of November 1984, there is no sharing of assets after divorce unless both mutually consent to sharing pension interest.

Van Deventer & Van Deventer Incorporated – Divorce Attorneys South Africa

Our divorce attorneys in Pretoria and Cape Town can assist you with your divorce proceedings as well as all matters related to divorce and retirement funds in South Africa.

Please contact us if you would like more information about claiming retirement funds after divorce whether you are a member or a non-member of the pension fund in question.