A more equitable division of retirement fund savings for divorced couples
could soon be on the law books.
The proposed new legislation will mean that pension benefits will be
excluded from your general assets when you get divorced and dealt with in
specific legislation known as the Division of Retirement Funds on Divorce
Act.
You will be able to waive your right to your spouse`s retirement fund
benefits. Or, under the proposals, you and your partner may agree to a
different distribution of the retirement fund benefits.
Key features of the proposals are:
* Entitlement to a share - generally half - of a spouse`s retirement fund
benefits accumulated during the marriage. Lump-sum transfers into the fund
from say, a previous retirement fund, will also be taken into account
provided a couple were married at the time;
* Benefits due to you from one spouse`s fund will be paid to the other
directly from the retirement fund;
* If the non-member spouse dies before the date on which the benefits
become due from the member spouse`s retirement fund, that share will form
part of the non-member`s estate; and
* The proposed legislation will apply only to marriages that broke up after
the provisions become law.
The proposals are contained in a report recently published by the South
African Law Commission.
The suggested provisions will apply to all marriages except those in which
the partners have in terms of their antenuptial contract, chosen complete
separation of their property. And even in this case, you and your spouse
may agree in writing that you will have a right to share in your spouse`s
pension benefit.
If you both work, the new legislation will allow each of you to share
equally in the pension benefit of the other, Blignault Gouws, past
president of the Actuarial Society of South Africa, says.
Speaking at a presentation by the society, he said until the mid 80s, you
had no claim to your spouse`s pension assets.
Then amendments to the Divorce Act in 1989 allowed you to lay claim to some
of the assets. But the amendments were unsatisfactory and often led to one
spouse losing out, usually the one who did not work.
Gouws says the important thing is that the proposals will create separate
rights providing for a fair division of retirement savings.
The current situation is that if you get divorced any pension assets are
lumped together with all the other matrimonial assets and are divided out
by agreement (often with one spouse being in an unfavourable bargaining
position) or fought over in court.
Under the Divorce Act, a non- member spouse only has claim to the value
from a member spouse`s fund at the date of divorce. The value does not
include investment growth or take inflation into account.
Lastly, because pension assets form part of the general matrimonial estate,
you can lose out if your spouse is declared insolvent after payment of the
pension benefits.