Way back in the past in South Africa if a couple got divorced and the one party in terms of a court order was awarded half of the other party’s pension, such pension payout would only take place once that party retired from his/her place of employment. This legislation clearly prejudiced the party who was entitled to half of his/her spouse’s pension, as that person would have to wait for years sometimes before receiving that pension money in terms of the court order.
"Clean break” principle
The “clean break” principle also says that after the divorce the parties must make a clean break from each other and this would not be the case if a party had to wait long for a payout.
Immediate payouts
The pension laws changed some time back and a party is now entitled to immediate payout of his/her pension fund share. This usually occurs within 60 days of the divorce and is clearly only fair as it affords speedy relief to a party needing money.
GEPF : the Mathilda Wiese case
The Government Employees Pension Fund (GEPF) changed its rules from 1 Aug 2019 to "no longer treats divorce claims as a notional debt but instead uses the service reduction approach to offset the benefit paid to an ex-spouse. In terms of the service reduction approach, a member’s pensionable service will be reduced to take into account the amount paid to the ex-spouse. The amount paid to the exspouse as per the divorce order, will be converted to the number of pensionable service years equivalent to it. The member’s pensionable service years will be accordingly adjusted".
But before the GEPF changed its rules, it happened that a divorcee from Malmesbury went to court claiming immediate payment of her share of her ex-husband’s pension. Her share is R300, 000.00. The new legislature did not apply to government pension funds but only to private pension funds, and her ex-husband worked as a policeman.
The lady in question, Mathilda Wiese (then 43) claimed that she needed the money immediately as she could not find work, and could not wait forever until her ex-husband retired before receiving her half share of the pension.
The lady in question furthermore claimed that it was unconstitutional that she should not be paid her share of her ex-husband’s pension immediately, whilst if he had belonged to a private pension fund she would have been paid immediately.
Apparently Mrs. Wiese wrote numerous letters to the state asking for payment of the pension before being forced to take action in the Cape High Court against the Minister, the pension fund and her ex-husband. She said the legislature wasn’t effective.
This article was written by Cape Town divorce expert, Peter M Baker
Info on Divorces & Pension Fund assets
Alongside the house being lived in; holdings in pension funds are often the biggest assets in a divorce.
NB: Under the new 2 pot system law, you must formally notify your spouse's pension fund in writing about the divorce proceedings, along with providing proof. Once this notice is given, the pension fund is legally prohibited from permitting any withdrawals, loans, or guarantees without the consent of the non-member spouse.
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