Family LawPension and Provident Funds

MAINTENANCE AND THE ATTACHMENT OF PENSION FUND BENEFITS

By 23/02/2011 July 21st, 2013 No Comments

Pension benefits are sacrosanct. Section 37A of the Pension Funds Act makes this quite clear and provides that any benefits that accrue to a member may not be reduced, transferred or ceded; further, no right to any benefit may be attached by any person or creditor, and neither shall it fall into a member’s insolvent estate. There are certain exceptions to this rule, one of which is where the Maintenance Act applies.

THE MAINTENANCE ACT

The Maintenance Act, No. 99 of 1998, provides that any person who may be entitled to maintenance from any other person – regardless of the relationship between them can avail themselves of the services offered by this Act. It includes children, spouses, parents and in fact wherever there is an obligation or duty of support imposed on any person.

Maintenance Courts are set up in the local Magistrates Offices and maintenance officers assist those people to prosecute their claims for support and the payment of maintenance.

Orders made by the maintenance officers in favour of children, spouses and others often had very little effect as those who were ordered to pay maintenance generally had no attachable assets and in many cases these errant payers concealed whatever assets they may have had. They were however often in employment and receiving monthly salaries. With this employment, they were often members of retirement funds, and were building up pension benefits – effectively one of the only assets in the estate of the party. These benefits could not be attached by their creditors and this included spouses, children and so on.

The law realised this and brought in legislation to protect and assist those requiring maintenance and support, and the act allows for the Maintenance Court to specifically order the attachment of any assets to settle maintenance claims without much of the long drawn out process often encountered in the courts.

Whenever anyone has failed to comply with a maintenance order the person in whose favour the order has been made applies to the court for a warrant of execution. That warrant can be executed against movable property, and thereafter any immovable property the defaulter might have. The Maintenance Court is also empowered to authorise the attachment of any emoluments (described as “salary, wages, allowances or any other form of remuneration, …” ) and make payment of those amounts to dependants. Included in these attachable assets, were monthly annuities that were paid to former members from existing pension funds. These annuities bought with the proceeds of pension, provident or retirement annuity lump sums were previously protected from attachment but section 16 of the Maintenance Act allows the maintenance court to address any pension fund administrator and order that administrator to make payment of those annuities to the dependants of that pension fund member.

More importantly and this is of great assistance to spouses and children particularly those who have not been paid maintenance for some time and substantial arrears have accrued, section 26, provides that:-

(4) Notwithstanding anything to the contrary contained in any law, any pension, annuity, gratuity or compassionate allowance or other similar benefit shall be liable to be attached or subjected to execution under any warrant of execution or any order issued or made under this Chapter in order to satisfy a maintenance order.”

Critically, the pension benefits of the defaulting party may be attached to satisfy the arrear maintenance payments. This attachment of pension benefits goes a long way to assisting indigent spouses and children who in the past have been severely prejudiced by not being able to access them as a result of their privileged status under the Pension Funds Act.

Pension Funds can no longer be used by errant maintenance payers to hide assets from those who depend on them for support and it is a sure sign that the legislature is serious in coming to the assistance of indigent spouses, children and others.

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.ExpertiseLitigation, 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/ TrustsLaw Society of South Africa Information Technology Committee. Trustee Verney College Educational TrustOtherTransvaal Provincial colours for Practical Shooting. Third degree Black Belt JKS Karate. Photographer and motor cyclist Lectured for Continuing Legal Education on Information Technology issues.