Answer to a question from a reader

Why is my wife getting a portion of my pension if we are married out of community of property?

The short answer

If you were married before 1 November 1984, she can apply for redistribution of assets.

The whole question

Dear Athalie

My wife and I married out of community of property so that she will not benefit from any money I have accrued over the years, nor be responsible for my debts. So why is she a beneficiary of my pension? 

The long answer

As you know, out of community of property with accrual means that each spouse is entitled to take out the assets they brought with them into the marriage, but thereafter they would share what they had built up during the marriage together if they divorced.

If you were married after 1 November 1984 out of community of property and without the accrual, the law is clear that each spouse retains their own estate – in other words, keeps what was theirs before the marriage – and neither spouse has a claim against the assets of the other.

But if you were married before 1 November 1984, section 7(3) of the Divorce Act says that on application from one of the parties, the high court can order that a part of one spouse’s assets be reassigned to the other spouse if the court finds that the other spouse has been financially prejudiced. 

In other words, if you were married before 1 November 1984, your wife would have the right to apply to the court for redistribution of assets. The courts have found that pensions must be counted as assets, so it is possible for the court to make an order that the pension fund must pay a percentage of your pension interest to your wife upon your divorce.

The Divorce Act was amended some thirty years ago to include Section 7(3) to allow the divorced spouse of a pension fund member the right to apply to share in retirement benefits, unless the spouses specifically excluded pension-sharing on divorce in their anti-nuptial contract. This came after a 1989 recommendation from the South African Law Reform Commission, which drew attention to the inequalities of not sharing pension benefits, especially with regard to women. 

After that, when it became apparent that the spouse who was awarded the redistribution of assets order was severely disadvantaged because it was not possible to access the pension interest until the member spouse left the pension fund, the “clean break principle” was introduced by inserting Section 37(D) into the Pension Funds Act. This meant that the portion of the pension interest assigned to the member spouse would be deemed to have accrued to the member on the date of the divorce, and thus the ex-spouses could make a clean break. 

In the court case between Eskom Pension and Provident Fund v. Krȕgel and Another 2012(6) SA 143 (SCA) the Supreme Court of Appeal held that: “A pension fund’s right to make deductions from a pension benefit is highly circumscribed and may be exercised only as expressly provided by s37D and s37A of the PFA [Pension Funds Act 24 of 1956]. Relevant for present purposes is s37D which, in s(1)(d)(ii) allows a fund to “deduct from a member’s benefit or minimum individual reserve, as the case may be… any amount assigned from such benefit or individual reserve to a non-member spouse, in terms of a decree granted under section 7(8)(a) of the Divorce Act, 1979.”

In other words, Section 7(8)(a) of the Divorce Act specifically enables the court when granting a decree of divorce to order a particular pension fund to pay a portion of the member’s pension fund to the non-member spouse and to add an endorsement to the member’s record.

Wishing you the best,

Answered on Nov. 26, 2021, 3:25 p.m.

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