DivorceFamily LawPension and Provident Funds

Pension benefits and Divorce – K v K and Another – a critique

By 05/11/2013 June 9th, 2021 No Comments

In K v K and Another [2013] JOL 30037 (WCC), the Appellant and the Respondent were married in community of property during 1978 and divorced on 08 September 2005.

In terms of the Divorce Order the joint estate was to be divided on the basis that each spouse retained a specific immovable property. No other asset forming part of the joint estate was mentioned therein.

The Appellant, some eight years later, applied to the High Court on an urgent basis for an order entitling her to a 50{bb7c59228909ee3c635bb54164678f79c6c2320af74994b444cd69be7e87e9c7} share in the Respondent’s pension fund as at date of divorce. The Appellant claimed in her Application that the Respondent had never disclosed his membership of the Cape Municipal Pension Fund (Second Respondent) and was therefore not aware of her rights to any such pension interest.

The Respondent denied her allegations and opposed them stating that the Appellant had chosen not to claim any such pension interest because if she did she would have been obliged to disclose her earnings and the Respondent’s share of them.

The Court a quo dismissed the Application but granted the Appellant leave to appeal. On Appeal the court upheld the Appeal and ordered the following:

“It is declared that the Applicant is entitled to 50{bb7c59228909ee3c635bb54164678f79c6c2320af74994b444cd69be7e87e9c7} share of the First Respondent’s pension and/or provident funds (the “pension funds”) valued at 8 September 2005”

This order was based on the view that “where parties who were married in community of property in subsequent divorce proceedings do not deal with a pension or provident fund interest which either or both of them may have had in separate pension or provident funds either by way of settlement agreement or by an order of forfeiture each of them nonetheless remain entitled to a share in the pension or provident fund to which the other spouse belonged to and such share is to be determined as at date of divorce by provisions of Section 7(7)(a) of the Divorce Act 70 of 1979.”
Section 7(7)(a) of the Divorce Act 70 of 1979 (the “Divorce Act”)  sets out that the pension interest of a party shall be deemed to be part of that party’s assets and as such is a patrimonial benefit of the marriage.

However, it must be pointed out that section 7(8)(a) of the Divorce Act sets out that

“the court granting the decree in respect of a member of such fund may make an order that any part of the pension interest of that member by virtue of section 7(7) is due or assigned to the other party to the divorce action concerned, shall be paid by that other party when any pension benefits accrue in respect of that member.”

Interpretation of the above would suggest that Section 7(7) merely includes the pension interest of a member spouse in the assets of a party to a divorce as a patrimonial benefit. This would therefore be allowed to be included in the joint estate and creates the possibility of a non-member spouse to be entitled to a portion thereof.

In order for the entitlement to accrue to the non-member spouse an order in terms of Section 7(8) of the Divorce Act must have been awarded. Such an opinion is further supported by the provisions of Section 37D(1)(d) of the Pension Funds Act 24 of 1956 (“Pension Funds Act”) which states that

“A registered fund may deduct from a member’s benefit or individual reserve to a non-member spouse in terms of a decree granted under Section 7(8)(a) of the Divorce Act (70 of 1979).” The Pension Funds Act further stipulates in Section 37D(4)(a) that the pension interest so assigned to the non-member spouse in terms of the decree of divorce “is deemed to accrue to the member on the date on which the decree of divorce is granted and on written submission of the court order by the non-member spouse must be deducted by the pension fund named or identifiable in the decree.”

In light of the above it is correct to submit that the pension interest is deemed to be part of the assets that form the patrimonial benefits of the marriage but incorrect to declare that the non-member spouse is automatically entitled to a share thereof in terms of Section 7(7)(a).

It should further be pointed out that the provisions of law that the Court relied on make reference to “the court granting a decree of divorce”. The Court that granted the decree of divorce did not incorporate a Section 7(8) order and as such as the Appellant did not meet the requirements for the variation of such court order in terms of the Rules of Court, another court therefore should not have made such an order.

It is therefore in our respectful view that the order in K v K and Another [2013] JOL 30037 (WCC) is incorrect in law and that failing the incorporation of an order in terms of Section 7(8) in a decree of divorce, a non-member spouse is not automatically entitled to a share of a member spouse’s pension interest.

Holly Hughes

Note : This decision is massively controversial within the industry and may have an effect on all parties married in Community of Property and divorced where no mention is made of a pension interest. A factor that may have influenced the court is the allegation that the spouse unaware of the pension asset. Parties need to be aware that a material non disclosure in settlement discussions may well entitle the court to revisit the settlement.

Ian McLaren

 

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.