Your right to share in the retirement fund of your spouse on divorce may soon be legally entrenched.
Furthermore, there will be no more quibbling about what you will be entitled to if proposals before the South African Law Commission are accepted.
Present legislation - the Divorcement Amendment Act, which has been in operation since August 1989 - deals with the sharing of a pension on divorce only in an indirect manner.
Now, specific legislation is being recommended which will deal exclusively with the issue.
One of the main causes of dissatisfaction with the present system of pension-sharing is the manner in which the value of an unmatured pension is determined.
Another problem is that it does not allow for the effect of inflation or for interest to be paid on the non-member's share of the pension in cases where payment of the non-member's interest is deferred.
The present legislation also lacks the sophistication necessary to deal with the complex pension fund environment.
Towards the end of 1997, the Department of Justice asked the Law Commission to come up with an appropriate long-term solution to pension-sharing on divorce.
A joint industry committee, including the Life Offices Association and the Institute of Retirement Funds, the Actuarial Society of SA, the Pension Lawyers Association and the Commissioner for SA Revenue Services, was set up under Mr Gideon Smit.
The first discussion paper by the committee was submitted to the South African Law Commission last week.
The recommendations of the committee are:
* That separate legislation be enacted to regulate the sharing of retirement fund benefits between spouses on their divorce;
* The divorced spouse acquires the right to share in the pension benefit when it becomes payable;
* Spouses should include partners under customary law or under recognised religions;
* The benefits should be paid directly from the member's fund by way of deferred retirement benefits. It is proposed that with a defined contribution scheme, the non-member spouse's share be split and be placed in a separate account on divorce. Such a share should earn investment returns and be subject to the same rules applying to the member's benefits;
* With a defined benefit scheme, it is suggested that the non-member spouse should, upon divorce, become entitled to a deferred retirement benefit which will become payable at the same time the member's benefits are paid out;
* Formulae for determining the non-member spouse's share of the members' retirement fund benefits should be clearly set out in the new legislation;
* The division of benefits should not be dependant on the matrimonial property system; and
* The proposed legislation should not be implemented retrospectively, but if you and your spouse fall outside the ambit of the new legislation, you can make the legislation applicable to your marriage by agreement between yourself and your partner.
Comment on the proposals, which are included in a draft bill, are invited. Send your responses to: The Secretary, South African Law Commission, Private Bag X668, Pretoria, 0001, by July 31, 1998. Alternatively, fax (012) 320-0936.
The full report is available on the Internet at: http://www. law.wits.ac.za/salc/salc.htm
