Law for divorce pension rights proposed

Published Mar 29, 2000

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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.

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