The Divorce Act and Pension Funds

Section 7(7)(a) of the Divorce Act of 1979 deals with a spouse’s pension interest. Before this amendment, a spouse’s pension interest didn’t form part of determining the estate’s value in a divorce.

So, for example, if your spouse had R2 million in a pension fund, a divorce settlement didn’t need to include this when valuing the assets to be split – whether you’re married in community of property or subject to the accrual system. 

The Section 7(7)(a) amendment changed all of this, deeming the value of your pension to be part of your asset calculation along with the balance of your assets.. So, when deciding on a divorce settlement amount for the other spouse, this pension value now formed part of the overall calculation.

But what happens when a divorce has been granted and no mention is made of a spouse’s pension interest? Does the other spouse have an automatic right to a share of the pension fund after the divorce, and would this mean relooking at the division of assets even when a court order has already been passed?

In short, the simple answer is no – the law says that once a joint estate is dissolved, you can’t look at it again.

This is illustrated in the case of Fritz v Fundsatwork Umbrella Pension Fund and others 2013 (4) SA 492 (ECP). The divorcing parties were married in community of property, and entered into a divorce settlement agreement that was finalised by the court. While the order dealt with their movable and immovable assets, it did not refer to the husband’s pension interest.
The ex-husband subsequently died and the ex-wife asserted that she was entitled to a 50% share in the pension interest of her late ex-husband. The court quite correctly dismissed the application. It did this on the grounds that once a joint estate has been divided by court order, the section 7(7) amendment is no longer applicable as there is no joint estate in existence.

The exception to this is where there has been fraudulent non-disclosure of the pension’s existence. So, if the ex-husband in the Fritz case had intentionally hidden the fact that he had a pension fund, the divorce settlement agreement could be challenged by his ex-wife.

However, in both cases it’s important to note that a spouse has a claim to the value of the pension asset rather than the specific asset itself. So, the value of the pension asset goes into the pool, and the split calculation is then done according to how you’re married. The spouse with more assets can then choose to pay out in whichever way he chooses – it does not have to come out of his pension fund.

By Gillian Lowndes, attorney specialising in family law