What to do if your spouse’s fund does not want to pay the pension interest during divorce?

ADIVORCEis a traumatic, emotionally and financially draining process. The good aspects of the past relationship are forgotten, and the bad take centre stage. In a best-case scenario, the parties and their attorneys can come to a workable solution regarding the division of assets.

- BRETT LADOUCE

If not done right, the division of the pension interest of a fund member and the payment of the agreed-upon portion of the pension interest of the member to the nonmember spouse can cause frustrations that overshadow all other divorce-related frustrations.

In terms of the Divorce Act, the pension interest of a retirement fund member is, in almost all cases, a deemed asset of the estate of that fund member that can be divided at divorce.

The Divorce Act defines pension interest as the withdrawal benefit that the member of that fund would have been entitled to if he or she resigned from employment on the date of divorce.

From September 1, 2024, the Pension Funds Act will introduce a definition of pension interest that equates to the member’s individual account or minimum individual reserve as at the date of divorce, he or she still has a pension interest in the fund that can be divided between the parties if the money is still in the fund on the date of divorce. The old trick of resigning before the date of divorce to withdraw money from the fund and avoid splitting it with your spouse is no longer as effective as it once was. Nonmember spouses who are in the divorce process are increasingly obtaining interdicts against the funds of spouses, preventing them from paying out any benefits to the member spouse before the divorce order is granted.

The divorce court has the power to order a retirement fund to pay a portion of the pension interest of the member spouse to the nonmember spouse.