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Undisclosed Pension Interest at divorce results in amendment to divorce order

A client very often comes to me with an order of divorce which does not go into detail as to how the assets should be divided. The final order of divorce merely states that there should be a division of the joint estate. This happens particularly when the parties are unable at the stage of divorce to make a decision as to how the assets should be divided, but in order to get the divorce through they just agree on the division of the assets. This often becomes problematic at a later stage when the parties find that they are unable to divide the assets.

In the recent case of K v K & Another, the parties were divorced, and the divorce order merely stated that there would be a division of the joint estate, and that each party would retain a specified fixed property. The first respondent had been a member of the Cape Municipal Pension Fund, who was the second respondent in this case. The divorce order did not mention that the first respondent had a pension fund. Neither did it mention any other asset owned by the parties.

Subsequent to the divorce being granted, the appellant had begun to struggle financially and wanted to launch an application for a 50% share in the pension and/or provident fund of the first respondent. The appellant claimed in her court papers that the first respondent had not disclosed to her that there had been a pension fund. She furthermore claimed that she had not been advised by her attorneys of her rights in respect of any pension fund which the first respondent may belong to.

The court a quo dismissed the claim of the first respondent. This court found that the first respondent had not been creditworthy in his evidence. The court however did give leave to the plaintiff to appeal against this decision. The appellant did appeal against this decision, and the appeal court found that the appellant was entitled to a 50% share of the first respondent’s pension and/or provident funds. The court found that irrespective of the fact that no mention had been made in the divorce order of the first respondent’s pension fund, the pension interest nevertheless formed part of the joint estate at the time of the divorce, and the first respondent was still now entitled to a half share.

This decision is going to change things dramatically in our law. In my career we have had numerous queries from people who want divorce orders to be changed in a similar manner as was the case in K v K & Another. This case will set the precedent that parties from now will have a lot more success in amending divorce orders so that the pension fund is included in the new order.

The decision in K v K & Another can be criticised from a point of view that once a divorce is made final, it cannot be later changed in this way. My personal opinion on the decision of K v K & Another is that it is the correct decision, as an order awarding the division of the joint estate means that each party is entitled to half of the assets, and that even though the pension fund may not have been directly mentioned in the divorce order, it is still an asset in the joint estate. The courts however must only, in my opinion, award half of the pension fund up until the date of divorce.

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.

Proposed two pot retirement system and impact on divorce settlements:

Get your info directly from spouse's pension fund, not indirectly from your spouse.

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Divorce & pension funds discussion forum

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