Divorce and preservation funds

In terms of the Divorce Act, Section 7(7)(a) deems that a member spouse’s pension interest should form part of their estate on divorce and, in turn, Section 7(8) determines that a court may order that a portion of the “pension interest” of a member of a fund be awarded to the spouse of such member.

A situation where an award in terms of Section 7(8) will not be possible is where the divorce action is in respect of a marriage out of community of property entered into on or after November 1, 1984, and in terms of which the ante-nuptial contract excludes community of property, community of profit and loss and the accrual system.

A “pension interest” in respect of a member of a pension fund is defined as referring to the benefits to which such member would have been entitled in terms of the rules of the fund if their membership of the fund would have been terminated on the date of the divorce on account of their resignation from their office, i.e. the member spouse must still hold a pension interest in the fund as at the date of divorce. Where the member belonged to a retirement annuity fund, “pension interest” refers to the total amount of the member’s contributions to the fund up to the date of the divorce, together with a total amount of annual simple interest on those contributions up to that date.

Lastly, the Pension Funds Act by way of Section 37D allows for the fund to pay a non-member spouse any portion of the member spouse’s interest in the fund as determined by a court order granted in terms of Section 7(8) of the Divorce Act.

What complicates things further is that seemingly your ex-husband has moved his retirement fund benefit which he had during your divorce to a preservation fund. This means the fund against which an order in terms of Section 7(8) could be made to pay a portion of the member’s interest over to you, no longer holds the pension interest.

The new fund has an obligation to protect the personal information of members and may not provide information to any person other than the member. The only way to obtain the information from the preservation fund, if your ex-husband is not willing to provide it voluntarily, is to go the legal route to compel the fund to do so.

The provisions of Section 37D(4)(a)(i)(bb) do however provide some relief.

It allows for the deduction of pension interest in terms of a binding divorce order by the pension fund or in your case the preservation fund, to which the previous pension fund transferred the pension interest.

There are therefore legal remedies available, but this will require an amended divorce order to include the division of your ex-husband’s pension interest.

Let Divorce Attorney Cape Town help

Divorce is always complex and emotive. Where pension interest is involved it can be even more complicated and the consequences permanent. Don’t settle for less than you are entitled to. Give Simon a call on +27 (0) 86 099 5146 or email sdippenaar@sdlaw.co.za.   Simon Dippenaar & Associates Inc. is an expert firm of family attorneys in Cape Town. We now offer online consultations. Worried? Call us now.

Further reading:

• Divorce and pension sharing
• Divorce and the negotiation for pension benefits
• Divorce and your retirement savings – here are the facts