GOVERNMENT EMPLOYEES PENSION LAW AMENDMENT ACT, 2011

An amendment to the Pension Funds Act 24 of 1956 ensured that where a spouse in divorce proceedings was awarded a portion of the pension benefits of the other spouse who was a member of a private pension fund, then in such an instance payment of the awarded portion must be made to the non-member spouse within 3 to 6 months of the date of the Decree of Divorce. Previously the position in this regard was that payment to a former spouse would only be made once the member exits the fund. The Government Employees Pension Fund took the stance that this change in legislation only applied to private pensions and thus state pensions were excluded from the application of this legislation. The case of Wiese v Government Employees Pension Fund 2011 JDR 0869 (WCC) changed this. 

In this case the court gave a declaration on invalidity based on the fact that sections 37D9(1)(d(1)(d),(3),(4) and (5) of the Government Employees Pension Law, Proclamation 21 of 1996, were inconsistent with section 9(1) of the Constitution which provides that everyone is equal before the law and has the right to equal protection and benefit of the law. The Court suspended the declaration of invalidity for a period of 12 months from judgement in order to allow parliament time to rectify the defects in the Government Employees Pension Fund Law. This would mean that it would be necessary for there to be a change in legislation by the 1 July 2012. On the 12 of December 2011, gazette number 34864 was assented. This amendment now provides for the payment of a pension interest to a former spouse of a member of the Government Employees Pension Fund on divorce or dissolution of a customary marriage and is binding on all divorces where a former spouse is entitled to a share in the member spouse’s pension from the 12 December 2011.  This will also apply to those divorces that took place before the 12 December 2011 and will be deemed to have accrued on the date of enactment. 

Upon divorce in terms of the Divorce Act or upon dissolution of a customary marriage, the portion of a member’s pension interest that is assigned to the member’s former spouse in terms of a Decree of Divorce, is deemed to accrue to the member on the date on which the Decree of Divorce is granted. The amount of the member’s pension interest shall be determined as at that date. The amount of the pension interest that is to be paid to the former spouse shall be calculated by the Fund in accordance with their rules as at the date of the Decree of Divorce. However, prior to the amount being determined, the member’s pension interest shall first be reduced by any amount of the member’s pension interest which has been awarded to a party as a result of a previous divorce. This amount may further be reduced by an equivalent amount of the share of the pension interest of a member which has been deemed to accumulate to the member as a benefit in advance of the benefit which would ordinarily be payable. This would mean that where a portion of the pension benefit was accumulated before the marriage this would not be taken into account. The amount payable to the member will further be reduced by the amount which has been assigned to the former spouse as well as any additional contributions. 

Within 45 days of the submission of the Court Order by the former spouse, the Fund must request the former spouse to elect whether the amount owed must be paid directly to the former spouse or whether it should be transferred to an approved Retirement Fund on behalf of the former spouse. Within 120 days of being requested to make this choice, the former spouse must inform the Fund of the manner in which they wish to receive payment. If the former spouse chooses that the amount owed must be paid directly to them, then it is necessary for the former spouse to provide payment details to the Fund in order to allow the Fund to effect payment. If the former spouse chooses to have the amount owed transferred to another Pension Fund, then it is necessary for the former spouse to provide the details of such an approved Pension Fund to the Fund. 

Once payment particulars have been given, the Fund shall within 60 days ensure that the amount is dealt with in accordance with the election made by the former spouse. In the event that the former spouse fails to make a choice or to identify the approved Retirement Fund to which they wish the money to be transferred, within 120 days of being requested, then the Fund shall pay the amount directly to the former spouse within 30 days of the expiry of this period. However in the event that the Fund cannot reasonably determine the manner in which payment should be made, the Fund will retain the amount plus interest, which is to be determined by the Board, until such a time as details of the manner in which payment is to be made are provided. Such details should be provided by the former spouse or a person on his or her behalf, as long as the Fund is satisfied that this party has the necessary capacity to make such instructions. 

Any portion of the member’s pension interest assigned to a former spouse in terms of a Decree of Divorce or a dissolution of a customary marriage granted prior to the enactment of this Act, for the purposes of any law other than the Income Tax Act and including but not limited to Section 7(8)(a) of the Divorce Act, be deemed to have accrued to the member on the date of the enactment and must be paid and transferred as though the divorce took place after the implementation of this Act, in accordance with the rules which have been mentioned.

 

 

 

Written by:       Katelyn McFarlane (Candidate Attorney)

 

  • Added 02 October 2012

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