Divorce and Pension Fund payouts
Historically, a pension fund would only pay out an amount of pension in terms of a divorce order on the date of resignation or retirement of the pension fund member. An amendment was then made to the Pension Funds Act on September 13 2007, according to which a pension payout would be paid to the non-member former spouse straight after the divorce. Prior to the amendment the situation was highly unfair because of the fact that the portion of the benefits of the non-member spouse did not earn any growth.
The aim of the National Treasury was to grant relief to all divorcees in this situation and not only those who got divorced after the amendment. There is however still a lot of uncertainty as to whether the amendment applies retrospectively. Sanlam’s Central Retirement Annuity Fund together with four other funds is currently preparing an application for a declaratory order confirming or not whether the amendment applies retrospectively.
All and all the amendment to the Pension Funds Act has been highly beneficial as there are no longer any unnecessary delays for beneficiaries.
written by Pete Baker, a divorce attorney in Cape Town .
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