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When Divorce splits up your retirement fund

Splitting a retirement fund benefit when you get divorced, it can be a long process; so make sure your lawyer provides the court the correct wording, and in doing so, the divorce order will become binding. As per the existing legislation the claim will be deducted from the member spouse’s fund value.

It is also of vital importance that the claim meets the required standards so we have prepared a checklist for you.

You need a binding section 7(8) divorce order; for your fund to be able to make a divorce payment. For this, the binding document needs to meet certain requirements;

  1. The pension interest must be specified for the non-member spouse. One must specifically use the term “percentage” or “amount of pension interest” assigned to the non-member spouse.
  2. The Fund must be identifiable by name; simply stating the members “retirement fund” will not suffice.
  3. The Fund needs to be ordered to pay the non-member spouse, meaning that there needs to be an order to pay out the pension interest of the non-member spouse, directly to the fund of the member spouse.
  4. The divorce order needs to be issued during the time that the member spouse is still part of the fund, it will not suffice if the member spouse left in March 2011 and the non-member spouse wants to claim in April 2011.
  5. The divorce order needs to be valid and issued by the High Court, Divorce Court or the Regional Court.
  6. Should the document not be binding on the Fund, a court order must be issued for the parties to change the flaw.

With all documents in order, and everything going to plan, the fund can make the payment. It is important to remember that this lump sum payout is taxable, and the tax payable by the non-member spouse will be deducted from his or her share.

  1. Technical facts: When your retirement fund is split, S7 of the Divorce Act states that pension Fund savings (including provident and retirement fund savings) form part of the assets of the member in the event of divorce, and therefore is considered when dividing assets in community of property. This however does not apply to marriages outside of community of property. Where the parties were married on or after 1 November 1984 in terms of an antenuptial contract which excludes community of property and loss and the accrual system, a court cannot make a section 7 (8) divorce order
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