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Understanding your retirement options and divorce

11 Aug 2017

Over the past couple of decades much has been said about how a person's retirement savings become part of the joint estate, available for sharing with their spouse upon divorce.

What you need to know:

The non-member spouse need not wait until the member resigns or retires

The Pension Funds Amendment Act of 2007 and the Financial Services General Amendment Act of 2008 introduced the "clean break" principle – which means that from September 13 2007, the non-member spouse may receive the portion of the member's benefit from the fund immediately after the divorce and without having to wait for the member's exit event up on resignation, retrenchment, retirement, or death.

The non-member spouse can receive any portion of the member's pension interest

The non-member spouse's entitlement to a portion of the member's pension interest is not limited to 50%. Any portion up to 100% of the member's pension interest can be awarded by a court and paid by the fund to the non-member.

The fund will not pay if the member's employment is terminated before the date of divorce

The Divorce Act defines pension interest –which is the only thing that a fund can pay to a non-member spouse – to mean that there cannot be pension interest if the member's employment terminated before the date on which the decree of divorce is granted by a court. However, it does not mean that the non-member spouse cannot get anything simply because the member resigned just before getting divorced. The non-member spouse can still claim the portion awarded to him or her directly from the member spouse in a civil legal suit against the member.

The non-member spouse may take the benefit in cash or preserve it

A non-member spouse has the option to take the portion awarded in cash or to preserve the benefit by having it transferred to another fund for his or her benefit. If the non-member spouse takes the benefit in cash, it will be taxed. If the non-member spouse transfers the benefit to another fund, the benefit will not be taxable.

A divorce order can be amended

A divorce order can be amended like any other court order. This would mean that the other party has a right to oppose the amendment of the order but the order can be amended if the court is of the view that there is good reason to do so.

Recent cases have shown that it is important to ensure that if divorcing parties agree that no party shall be entitled to a portion of the other party's pension interest, then it is safer to include a specific provision in the court order which records that there shall not be any sharing of the pension interest.

To find out more about your pension or retirement options with your employer, contact Liberty Corporate on 011 558 4871 or email us at

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Liberty Group Limited (Reg. no 1957/002788/06) is a licensed Insurer and an Authorised Financial Services Provider (no 2409).