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Divorce and Pension

 

We understand that divorce can be a difficult and emotional process, and it's important to make sure that your finances are taken care of during this time. One aspect that can often be overlooked is the impact of divorce on pensions. In this article, we will provide you with comprehensive information on what South Africans need to know about divorce and pensions, so you can make informed decisions about your financial future.

 

Understanding Pension Funds

Pension funds are set up to provide a retirement income to employees who contribute to the fund during their working years. When you get divorced, your pension fund may be divided between you and your spouse, depending on the specific circumstances of your case.

How Are Pensions Divided in Divorce?

In South Africa, pension funds are considered part of the joint estate in the event of a divorce. This means that the value of the pension fund is taken into account when dividing assets between spouses. The Pension Funds Act allows for the division of pension benefits in the event of a divorce, as long as certain requirements are met.

The Types of Divorce Orders

There are two types of divorce orders that can be issued by the court in South Africa:

1. Pension Interest

A Pension Interest order requires the pension fund to pay a portion of the pension benefits to the non-member spouse when the member spouse retires or withdraws from the fund. This portion is calculated based on a formula that takes into account the length of the marriage and the member spouse's contributions to the fund.

2. Pension Fund Credit

A Pension Fund Credit order requires the pension fund to transfer a portion of the member spouse's pension interest to the non-member spouse's own retirement fund. This is usually done when the non-member spouse also has a pension fund, or when they wish to use the funds to set up their own retirement annuity.

The Importance of a Pension Fund Investigation

It is important to conduct a thorough investigation into the value of your pension fund before finalizing your divorce settlement. This will ensure that the correct amount is awarded to each spouse, and that there are no surprises down the line.

The Role of a Divorce Attorney

A divorce attorney can play an important role in helping you navigate the complex process of dividing pension funds in a divorce. They can advise you on your rights and obligations, and help you negotiate a fair settlement that takes into account your pension benefits.

Conclusion

Divorce can be a stressful and emotional time, but it's important to ensure that your financial future is protected. Understanding the impact of divorce on pensions is crucial, and with the right information and advice, you can make informed decisions that will benefit you in the long term. If you're going through a divorce, be sure to speak to a qualified attorney who can guide you through the process and help you achieve a fair outcome.