An argument for necessary amendments to the legislative provisions regulating the sharing of retirement savings upon divorce in South Africa

• Jurisdiction: South Africa
• Author: Clement Marumoagae
• Pages: 280-301
• Published date: 16 August 2019
• Date: 16 August 2019

AN ARGUMENT FOR NECESSARY

AMENDMENTS TO THE LEGISLATIVE

PROVISIONS REGULATING THE SHARING

OF RETIREMENT SAVINGS UPON DIVORCE

IN SOUTH AFRICA

CLEMENT MARUMOAGAE

Senior Lecturer, University of the Witwatersrand, School of Law

Abstract

This article advocates for critical legislative changes in the Divorce

Act 70 of 1979 and other pension law related statutes regarding

retirement fund members savings that are vulnerable to be shared

upon divorce. It argues that the phrase ‘pension interest’ should be

replaced by the phrase ‘retirement savings’ to avoid unnecessary

confusion that arises in the categorisation and quantif‌ication of the

amount that the non-member spouse should be paid when he or

she divorces a retirement fund member. This article also argues for

the deletion of the deeming requirements in section 7(7) of the

Divorce Act. Further that there is no need for some special

legislative mechanism which empowers non-member spouses to

claim portions of their member spouses’ retirement savings, as this

amounts to an unnecessary complication in the law regulating the

sharing of retirement savings when the parties divorce.

I INTRODUCTION

There is an urgent need for members of retirement funds to be made

aware of the legal implications for their retirement benef‌its should they

marry and subsequently divorce. Members of retirement funds who are

married in community of property or out of community of property

with the accrual system, should know that they will be legally obliged to

share their ‘retirement savings’ held by their retirement funds with their

former spouses should they divorce.

1

The law regulating the division of

* LLB LLM (Wits) LLM (NWU) Diploma in Insolvency Law and Practice (UP). Practising

Attorney of the High Court at Marumoagae Attorneys.

1

In South Africa, parties that marry without executing an antenuptial contract are

automatically regarded as married in community of property (MRvJR2010 JDR 1059 (GNP)

280

(2018) 30 SA Merc LJ 280

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retirement savings upon divorce is complex and retirement fund

members may f‌ind diff‌icult to understand. Its complexity has also been

demonstrated by inconsistencies in the judgments of the courts deliv-

ered over the years.

2

The inconsistent judgments also emanate from the

way provisions dealing with pension interest in the Divorce Act

3

and

other pension-law related statutes have been interpreted. This article is,

however, not concerned with these inconsistencies or any entitlement

that a non-member spouse may have towards the member spouse’s

pension interest as these two issues have already received adequate

academic comment and judicial clarif‌ication in recent times.

4

The purpose of this article is critically to evaluate the statutory

def‌inition of the phrase pension interest with a view to making

recommendations regarding critical legislative changes. There is a need

to show that the way in which legislative provisions dealing with the

sharing of ‘retirement savings’ on divorce have been drafted, unneces-

sarily complicates South African jurisprudence relating to pension

sharing when the parties divorce. This article outlines the law relating to

allowable deductions from retirement funds. It also addresses the need

to remove the phrase ‘pension interest’ from the Divorce Act and all

pension-law statutes, and to replace it with the phrase ‘retirement

para 22). In terms of s 2 of the Matrimonial Property Act’ ‘[e]very marriage out of community

of property in terms of an antenuptial contract by which community of property and

community of prof‌it and loss are excluded, which is entered into after the commencement of

this Act, is subject to the accrual system . . .’. In terms of s 3 of the Matrimonial Property Act,

‘[a]t the dissolution of a marriage subject to the accrual system by divorce ..., the spouse whose

estate shows no accrual or a smaller accrual than the estate of the other spouse, ... acquires a

claim against the other spouse ... for an amount equal to half of the difference between the

accrual of the respective estates of the spouses’. Marriages in community of property and

those which are out of community of property with the application of the accrual system allow

parties thereto to claim portions of their spouses’ pension interests unless such assets are

expressly excluded from being shared in the antenuptial contract.

2

See, for instance, Sempapalele v Sempapalele 2001 (2) SA 306 (O); Maharaj v Maharaj

2002 (2) SA 648 (D&CLD); and Kotze v Kotze 2013 JOL 30037 (WCC).

3

Divorce Act 70 of 1979.

4

Some clarif‌ication regarding the law relating to pension interests in South Africa was

provided by the Supreme Court of Appeal in Ndaba v Ndaba 2017 (1) SA 342 (SCA) para 25.

Sound academic commentary in this area of law has been provided by among others:

Marumoagae, ‘The law regarding pension interest in South Africa has been settled! Or has It?

With reference to Ndaba v Ndaba (600/2015) [2016] ZASCA’ (2017) 20 PELJ 1; Jeram, ‘Is it

still necessary to obtain a court order against the fund? A rebuttal’ (2017) June De Rebus 28;

Marumoagae, ‘Enforceable orders against retirement funds after divorce: A rejoinder’ (2017)

June De Rebus 34–36; Nevondwe, ‘The law regarding the division of the retirement savings of

a retirement fund member on his or her divorce with specif‌ic reference to Cockcroft v Mine

Employees Pension Fund [2007] 3 BPLR 296 (PFA)’ (2009) 13 Law, Democracy & Development

13; and Mothupi, ‘Some practical effects of the Financial Services Laws General Amendment

Act 2008 on Amending Section 37D(4) of the Pension Funds Act’ (2010) 22 SA Merc LJ 214.

SHARING OF RETIREMENT SAVINGS UPON DIVORCE IN SOUTH AFRICA 281

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