Divorce OrdersNaleen JeramClement MarumoagaeMichelle DavidJeanri de Souza

Since 13 September 2007 – why are theamendments in the Pension Funds Act andnot the Divorce Act?

Leading to many problems

Way forward

Position of deferred members/pensioners

• Eskom Pension and Provident Fund v Krugel (689/10) [2011] ZASCA 96 (31 May 2011)

• In response – Legislature introduces s37D(1)(d), which reads:“deduct from a member’s or deferred pensioner’s benefit,

member’s interest or minimum individual reserve, or thecapital value of a pensioner’s pension after retirement, asthe case may be— any amount assigned from such benefitor individual reserve to a non-member spouse in terms of adecree granted under section 7 (8) (a) of the Divorce Act,1979 (Act No. 70 of 1979) or in terms of any order made by acourt in respect of the division of assets of a marriage underIslamic law pursuant to its dissolution;”

• deferred pensioner is defined as “a member who has not yetretired but has left the service of the employer concernedprior to normal retirement date, as defined in the rules,leaving in the fund the member’s rights to such benefits asmay be defined in the rules;”

Position of Pensioners

• S37D(1)(d) reads: “deduct from … , or the capital value of a pensioner’s pension after retirement, 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 (Act No. 70 of 1979)… ”

• Koekemoer v ABSA Pension Fund and another case no. PFA/GP/00025359/2016/MD 7 October 2016 (PFA) – see paras 5.11 and 5.12 – obiter remarks

• Pension outsourced to insurer – can Insurer be ordered to pay former spouse? (see Montanari v Montanari case number 14/26868 as yet unreported judgment of the High Court of South Africa (Gauteng Local Division, Johannesburg) delivered on 10 August 2016 per Victor J)

Must the Fund be ordered to pay in order for it to be Binding on the Fund?

• Ndaba v Ndaba (600/2015) [2016] ZASCA 162 (4 November 2016)

• Automatically forms part of joint estate

• Majority and Minority Judgments on ordering of Fund to pay

• Variation: Orders that don’t order fund to pay but require records to be endorsed or that benefit payable in terms of DA or PFA?

Ndaba (SCA) - Majority Judgment (footnotes omitted):

“[27] Section 7(8), on the other hand, creates a mechanism in terms of which the Pension Fund of themember spouse is statutorily bound to effect payment of the portion of the pension interest (as atthe date of divorce) directly to the non-member spouse as provided for in s 37D(1)(d)(i) of thePension Funds Act 24 of 1956 and s 21(1) of the Government Pension Law, 1996. This is as far as s 7(8)goes and no further. The non-member spouse is thereby relieved of the duty to look to the memberspouse for the payment of his or her share of the pension interest with all its attendant risks. Theremarks by this court in relation to s 7(8)(a), in Old Mutual Life Assurance Co (SA) Ltd & another vSwemmer 2004 (5) SA 373 (SCA) are instructive. It said the following (para 20):

“Once a part of the pension interest of the member spouse becomes “due” or “is assigned” to thenon-member spouse in the course of the divorce proceedings, the Court may order that such part ofthe pension interest must be paid by the pension fund concerned to the non-member spouse “whenany pension benefits accrue in respect of” the member spouse. . . .”

Minority Judgment“[69] …This does not help the appellant much, because, absent an order in terms of s 7(8)(a), thedeclaratory order in terms of s 7(7) remains enforceable only between the parties. The pension fundto which they both belong, the GEPF, is empowered by law to give effect only to an order made interms of s 7(8)(a).

[70] Such an order must direct the pension fund to make payment of a member’s pension interest toa non-member spouse, and endorse its records accordingly. A declaratory order such as the one madeby my colleague, is not sufficient. The upshot of this is that, unless and until one of the partiesapproaches the regional court for an order in terms of s 7(8)(a) of the Divorce Act, the appellant’svictory in this court would remain hollow and a brutum fulmen, as far as the GEPF is concerned.”

Orders which qualify pension interest from date of marriage to date divorce

• Can it be accepted? If yes – how must it becomputed?

• What if date of marriage prior to joining fund?• Phago v Sentinel Mining Industry case no.

65372/2013 as yet unreported judgment of theHigh Court of South Africa (Gauteng, Pretoria) 4November 2014 per Jordaan J

• Phago v Sentinel Mining Industry RetirementFund and another case noPFA/LP/0000961/2012/VPM 29 August 2013(PFA)

Jurisdiction of PFA over interpretation of divorce orders

• Phago v Sentinel Mining Industry case no. 65372/2013as yet unreported judgment of the High Court of SouthAfrica (Gauteng, Pretoria) 4 November 2014 perJordaan J

• The court held (at par 20): “It is further argued, and in myview correctly, that the pension funds adjudicator cannotreformulate the complaint and cannot declare a highcourt order unenforceable. This in my view is trite law. Ihave been referred to a number of authorities in thisregard and it is trite law that a judgment of any courtstands until it is set aside by a court of higher jurisdictionor varied on application of any of the parties involved inthe matter”.

• Definition of Complaint

Appointment of liquidators where parties cannot agree on division of joint estate

• Power of Liquidator iro Pension Interest

• When can Liquidator demand pension interest benefit from the Fund?

• Ndaba v Ndaba (600/2015) [2016] ZASCA 162 (4 November 2016)

• Kgopane v Kgopane and Another(1819/2011) [2012] ZANWHC 58 (16 August 2012)

Meaning of “nett pension interest”

• Ndaba v Ndaba (600/2015) [2016] ZASCA 162 (4 November 2016) – accepted wording but no discussion thereof

• What does it mean and approach to be adopted by Funds?

• Gross entitlements vs Rand value amounts -how do Funds treat them?

Information – what can be provided to Non-member Spouse?

• Krygkor Pensioenfonds v Smith 1993 (3) SA 459 (A)

• Labuschagne v Labuschagne and Others[2016] ZAFSHC 163 (22 September 2016)

• Noordien v Metal Industries Provident Fund[2002] 3 BPLR 3236 (PFA)

• Benefit Accrued – married in COP – can information about benefit be provided to spouse?

Withholding of benefits pending divorce –position to be adopted by Funds?

• When can it be done and process to befollowed by Funds?

• Naidoo v Feralloys Provident Fund case no.PFA/KZN/9694/2006/AM 31 July 2008 (PFA)

• Williams v Alexander Forbes RetirementFund (Pension Section) and Another case no.PFA/WE/6545/2011/SM 17 October 2012(PFA)

• Interdicts/Court orders

Forfeiture orders iro pension interest –powers of court

• Tsebe v Tsebe (39138/2014) [2016] ZAGPPHC 575 (24 June 2016)

• Moss v Moss [2006] 1 BLLR 45 (E)

• M v M (2014/3044A) [2014] ZAGPJHC 296 (29 October 2014)

Defined Benefit Funds – how do they recover payment from member spouse?

• GEPF (loan account)

Islamic marriages – current position?

• Rose v Rose and others [2015] JOL 32797 (WCC)

• Paulse v Sanlam Staff Umbrella Pension Fund and another case no. PFA/WC/00011266/2014/MD 23 April 2015 (PFA)

• What can be deducted?

• Calculation based on date of court order or termination date under Islamic law?

THANK YOU