Family LawPension and Provident Funds

Getting Divorced – Pension benefits

By 24/02/2011 July 21st, 2013 No Comments

One of the proprietary consequences in the divorce of any party is the division of the assets of the former joint estate. It often happened that there were no assets in the joint estate but one or both spouses were members of a retirement fund. These retirement fund benefits did not form part of the joint estate and in many cases spouses were prejudiced as there were no assets that could be utilised to soften the financial effects of divorce.

In 1989 the Divorce Act was amended to allow pension benefits to be deemed part of the joint estate for the purposes of distributing the estate. The problem with this Act, was that these pension benefits could only be accessed when the retirement fund member left the fund. So, even though a needy spouse required that benefit to be given to him or her, so that he or she could support himself or herself and the children of the marriage – the benefit could only be paid when the member spouse left the fund or died. Clearly not what the Act intended. This state of affairs was rectified and the law was changed to allow the non-member spouse to receive the pension benefit at the time of the divorce and that spouse could decide to take the benefit in a cash lump sum, or the benefit could be transferred to a Retirement Annuity Fund.

As the law stands to-day, a non member spouse is entitled to share in the pension interest of the spouse who is a member of a retirement fund (pension, provident or retirement annuity) and may take that benefit immediately. This, any link between the spouses, between each other and vis-a-vis their relationship with the particular fund, would be broken and each would thereafter continue with their own lives. The non-member spouse could also request that the benefit entitlement be transferred to another pension fund. A course of action not often taken.

Thus – in those marriages where there were no assets available for distribution, pension benefits were brought into the joint estate to assist spouses with some base from which to start a new life.


Ian Mc Laren

Ian Mc Laren

Ian McLaren BA LLB (WITS) General Educated St Johns College, Houghton. BA LLB University of the Witwatersrand 1984 Founded McLarens Attorneys September 1986. Right of Appearance High Court, October 1996. Expertise Litigation, Labour Law, Commercial Law, Family Law, Pension and Provident Funds, Customs and Excise, Wills, Deceased Estates, Trusts, Commercial Agreements, Reviewing and Drafting Government Legislation, Information Technology. Committees/ Trusts Law Society of South Africa Information Technology Committee. Trustee Verney College Educational Trust Other Transvaal Provincial colours for Practical Shooting. Third degree Black Belt JKS Karate. Photographer and motor cyclist Lectured for Continuing Legal Education on Information Technology issues.