Can My Ex-Wife Claim My Pension Years After Divorce In South?

Can My Ex-Wife Claim My Pension Years After Divorce In South?

Yes, your ex-wife can claim your pension years after divorce, if the divorce order includes a provision under section 7(8) of the Divorce Act and meets certain conditions, each spouse is generally entitled to 50% of the pension funds accumulated during the marriage, though there may be some exceptions and deductions.

The rules for dividing pension funds can vary depending on the type of fund, and the process can be complicated. In South Africa, there are two main types of pension funds: retirement annuity funds and pension or provident funds.
When a couple divorces, the division of assets follows marital property laws. South Africa uses a dual system, where a marriage can be “in community of property” or “out of community of property.”

The court handling the divorce has the discretion to decide how much of the pension interest the ex-spouse receives, which can range from 0% to 100% (or a specific amount that doesn’t exceed 100% of the pension interest).

Types of Marriage Systems in South Africa

In South Africa, three main marriage systems determine what each spouse must have after divorce:

• In Community of Property: This is the default system if no prenuptial contract is signed. Under this arrangement, both spouses jointly own all assets and liabilities acquired during the marriage. In the case of divorce, everything is generally divided equally between them.
• Out of Community of Property (with accrual): In this setup, each spouse maintains ownership of their assets, but they share any value growth that happens during the marriage. If one spouse’s assets grow less than the other’s, they are entitled to half of the difference in value.
• Out of Community of Property (without accrual): In this system, each spouse completely owns and manages their assets and debts, and there is no sharing unless they agree to it beforehand.

The Clean Break Principle

The clean-break principle, introduced by the Pension Funds Amendment Act of 2007, allows for the immediate division of retirement fund benefits when a couple divorces. Under this rule, a portion of the member’s retirement savings can be deducted and paid to the non-member spouse or transferred to their chosen retirement fund.

This means that the ex-spouse can access their share of the member’s retirement savings, as agreed upon or ordered by the court, without waiting for the member to retire. The amount paid to the non-member spouse can’t be more than 100% of the member’s withdrawal benefit at the time of divorce. The pension fund must be instructed by the court to make this deduction and payment.

The non-member spouse can choose to receive a lump sum in cash or transfer the money to a different approved pension fund. However, the pension fund is not required to pay any interest on this amount, unless there is a delay in payment beyond the time limits set by the law.

What is Pension Interest?

Pension interest is outlined in the Divorce Act for most types of retirement funds, except for preservation funds. According to the Pension Funds Act, pension interest refers to the amount a member would get if they left the fund on the date of divorce. For pension and provident funds, this is the benefit they would receive if they resigned at that time.

For retirement annuities, it is the total of their contributions up to the divorce date, plus simple interest. In a preservation fund, it is the notional amount the member would get if they left the fund on the divorce date.
Instead of a percentage of the pension interest, a specific rand amount can be assigned to the non-member spouse, as long as it does not exceed the value of the pension interest.

The law does not allow for additional interest on the portion given to the non-member spouse, as the Act already provides for growth on that amount. Interest only comes in if the pension interest is not paid within the time limits set by law after the divorce.

How to Calculate Pension Interest

In a retirement annuity fund, pension interest is defined in the Divorce Act as the total amount a member has contributed to the fund up until the date of divorce, plus simple annual interest on those contributions. The Pension Funds Act says that the interest paid to a non-member spouse can not be more than the return from the fund on the pension interest.

So, the non-member spouse can claim whichever is lower: either the simple annual interest (currently 15.5%) or the actual fund return on the pension interest awarded by the divorce order.

The non-member spouse is only entitled to earn returns on their share of the pension interest from the time they submit the court order to the fund and decide whether they want the money paid out or transferred to another fund, until the date of payment.

For preservation funds, if a one-time withdrawal was made before the divorce, the remaining investment (usually the death or disability benefit) will be used to calculate the value of the divorce settlement.

In South Africa, your ex-wife might still be able to claim a share of your pension even years after the divorce, depending on what was agreed in the divorce order and the pension value at the time of the divorce. I hope the provided information is helpful, share your thoughts below in the comment section.