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REPUBLIC OF SOUTH AFRICA
DIVISION OF RETIREMENT FUNDS ON DIVORCE ACT
...........................
(As introduced)
...........................
(MINISTER OF ....................)
GENERAL EXPLANATORY NOTE:
[ ] Words in bold type in square brackets indicate omissions from existing enactments.
___________ Words underlined with a solid line indicate insertions in existing enactments.
___________________________________
B I L L
To provide for the division of retirement fund benefits on the divorce of spouses; and to provide for matters related thereto.
BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:-
Definitions
1. In this Act, unless the context otherwise indicates-
(i) “defined benefit scheme” means a retirement fund which is not a defined contribution scheme;
(ii) “defined contribution scheme”means a retirement fund under which the retirement fund benefits payable are based mainly on-
(a) the contributions made to the fund by or for the benefit of a member;
(b) any amount transferred to the fund from any other fund in respect of a member;
(c) investment returns in respect of such contributions and transfers; and
(d) any surplus or deficit allocated to a member;
(iii) “divorce” includes the annulment of a marriage by a competent court;
“marriage” means a marriage solemnized in terms of the Marriage Act, 1961(Act 25 of 1961) or a customary marriage as defined in section 1 of the Recognition Of Customary Marriages Act, 1998 (Act Of 1998);
(v) “matured” in relation to retirement fund benefits means that such benefits have in terms of the rules of the fund concerned become payable to a member on the member’s retirement or permanent disability, which event occurred before the date of the member’s divorce, or in the case of an annuity, that the first annuity payment thereunder became payable to the member before the date of the member’s divorce and “maturity” has a related meaning;
(vi) “member” means a member of a retirement fund and includes a person who has ceased to be a member of such fund on account of retirement or permanent disability;
(vii) “non-member spouse” means the spouse of a member, whether or not that spouse
is also a member of the same or any other retirement fund;
(viii) “pensionable service” in relation to a member means the period on which the retirement fund benefits payable to the member in terms of the rules of the fund is based;
(ix) “retirement fund” means-
1.7 any pension fund organization registered or to be registered under the Pensions Fund Act, 1956 (Act No. 24 of 1956); or
1.8 any retirement fund or retirement scheme established by law; or
any retirement fund or retirement scheme established in terms of any collective agreement in terms of the Labor Relations Act, 1995 (Act No. 66 of 1995);
(x) “retirement fund benefit” means any benefit payable in terms of the rules of a retirement fund in consequence of the membership or past membership of a member;
(xi) “spouse” includes a divorced spouse;
(xii) “unmatured” in relation to retirement fund benefits means that at the date of the divorce of the spouses the benefits are not yet matured benefits.
General guidelines for sharing of retirement fund benefits on divorce
2. (1) If a member’s marriage is dissolved by divorce the divorced non-member spouse is, in accordance with the provisions of this Act, entitled to share in the retirement fund benefits which accumulated in respect of the member during the subsistence of the marriage.
(2) Spouses may in their antenuptial contract explicitly exclude any sharing of
retirement fund benefits between them in the event of their divorce.
(3) A spouse may in writing waive any right which he or she may have to share in
the retirement fund benefits of the other spouse in terms of the provisions of this Act.
(4) A spouse may in writing agree to accept any other asset or assets in place of any
right which he or she has to share in the retirement fund benefits of a member.
(5) A spouse who in terms of this Act has a right to share in the retirement fund benefits of the other spouse may in writing agree to share in such benefits in a proportion different from that which is provided for in this Act.
(6) Whenever effect cannot be given to a provision of this Act because of lack of exact complete information, the fund concerned, or the actuary of the fund if there is one, may, when applying any formula provided for in this Act, make use of approximate calculations, having regard to the objectives of this Act.
Division of unmatured retirement fund benefits in defined contribution scheme
3. (1) If retirement fund benefits in respect of a member are embodied in a defined contribution scheme and the member’s marriage is dissolved by divorce before the maturity of those benefits, the non-member spouse shall on the date of the divorce acquire a right to a share of those benefits, determined in accordance with the following formula :
½ (A+B+C+D)
where: A = the total of all contributions applied in respect of retirement benefits made to the fund by or on behalf of the member during the subsistence of the marriage between the member and the non-member spouse, excluding any transfer value of benefits paid to the fund in respect of the member during the said period;
B= such part of any transfer value of benefits paid to the fund in respect of the member during the subsistence of the marriage as may be attributable to the period of the marriage;
C=the net investment returns allocated or which are still to be allocated in respect of
the contributions contemplated in A and such portion of any transfer value of benefits contemplated in B, up to the date of the divorce; and
D= any surplus or deficit allocated by the fund to the member during the subsistence of the marriage.
(2) The member’s retirement fund must upon receiving notice in the prescribed form that a division of the member’s retirement fund benefits is to be effected at the date of the member’s divorce, effect a splitting of the member’s retirement fund benefits in accordance with subsection (1) and must open a separate benefit record in respect of the non-member spouse’s share of the benefits.
(3) The non-member spouse’s share of the retirement fund benefits earns investment returns as if the non-member spouse became a member of the retirement fund concerned.
(4) After the splitting of retirement fund benefits as contemplated in subsection (2), the rules of the retirement fund concerned in respect of any retirement option available to the member spouse shall also apply to the non-member spouse independently of the member as if the non-member spouse is the member in respect of such share.
(5) The non-member spouse’s entitlement to a share of the member’s retirement fund benefits shall, in proportion to its effect on the member’s share of those benefits, be subject to any rules of the fund pertaining to the vesting of benefits in accordance with the member’s
period of service or membership of the fund or the age of the member.
(6) Whenever a splitting of retirement fund benefits has been effected as contemplated in subsection (1), the retirement fund concerned -
(a) must, if requested thereto in writing by the non-member spouse, transfer the non-member spouse’s share of the benefits to another retirement fund for the benefit of the non-member spouse : Provided that to the extent that any benefit may not have vested at the date of the request for the transfer of the benefits, the non-member spouse’s share of the benefits must be reduced to take into account such non-vested benefits;
(b) may of its own accord transfer the non-member spouse’s share of the benefits to another retirement fund approved by the non-member spouse : Provided that no such transfer shall be effected without the written consent of the non-member spouse, unless the benefits have fully vested.
(7) A non-member spouse’s share of any retirement fund benefits retained by a retirement fund in a separate benefit record as contemplated in subsection (2) or transferred to another retirement fund as contemplated in subsection (6), is not available for voluntary withdrawal by the non-member spouse.
(8) If the non-member spouse dies before the date on which his or her share of the of the member’s retirement fund benefits become payable, the fund shall be liable to the estate of the deceased non-member spouse to an amount equal to the amount which would have been payable in terms of subsection (6) had the non-member spouse requested the transfer of his or her share of the benefits on the day preceding his or her death.
Division of unmatured retirement fund benefits in defined benefit scheme
4. (1) If a retirement fund benefit which is to be divided between spouses on their divorce is unmatured and is embodied in a defined benefit scheme, the non-member spouse shall, on the date on which the benefit becomes payable in terms of the rules of the fund, be entitled - (a) in the case of a benefit which is payable in the form of a lump sum and which accrues as a result of the member’s resignation or dismissal or the dissolution of the fund, to the proportion of such benefit determined in accordance with the following formula:
½ [A +( B/C) x D + (E/F) x G]
where A = such part of the benefit acquired by way of transfer from another retirement fund during the subsistence of the marriage, plus that part of the benefit acquired by way of purchase of additional pension rights during the subsistence of the marriage;
B = the period from the date of the marriage, or the date of the commencement
of the member’s membership if later, up to the date of the divorce;
C = the period from the date of commencement of the member’s membership of the fund to the date on which the benefit becomes payable;
D = that part of the benefit which is not attributable to a particular period of the member’s membership of the fund or service with the employer;
E = the period of pensionable service accrued in respect of the member during the subsistence of the marriage, excluding any additional period purchased or otherwise acquired;
F = the total period of pensionable service accrued in respect of the member, excluding any additional period purchased or otherwise acquired;
G= the total benefit available to the member.
less -
that part of the benefit acquired by way of transfer from another retirement fund or by way of the purchase of additional pension rights before the date of the marriage or the date of the divorce,
less-
such part of the benefit acquired by way of transfer from another retirement fund during the subsistence of the marriage as may not be attributable to the period of the marriage,
less-
that part of the benefit contemplated in A above,
less-
that part of the benefit contemplated in D above;
(b) in the case of a benefit which becomes payable in any other circumstances or which is not payable as a lump sum, to a benefit the value of which shall be determined in accordance with the formula contemplated in paragraph (a) above where -
G = the value of the actuarial liability of the fund in respect of the member on the day
preceding the day on which the benefit becomes payable, as calculated by the actuary of the fund,
less -
that part of the benefit which was accumulated or acquired in respect of the member before the commencement of the marriage or after the divorce,
less -
that part of the benefit contemplated in A and D of paragraph (a) above but calculated with reference to the actuarial liability of the fund;
less -
such part of the benefit acquired by way of transfer from another retirement fund during the subsistence of the marriage as may not be attributable to the period of the marriage.
(2) The member’s retirement fund must, if notified in the prescribed form of thenon-member’s right to a share of the member’s retirement fund benefits, pay to the non-member spouse his or her share of those benefits direct from the fund when the benefits become payable.
(3) If the non-member spouse dies before the date on which his or her share of the member’s retirement fund benefits become payable, the member’s retirement fund shall be liable to the estate of the deceased non-member spouse for an amount equal to the benefit to which the non-member spouse would have been entitled in terms of subsection (1) (a) had the member resigned on the date of the death of the non-member spouse.
Division of matured retirement fund benefits
5. (1) If matured retirement fund benefits must be divided between a member and his or her spouse on their divorce, the share of those benefits to which the non-member spouse shall be entitled must be determined in accordance with the formula contemplated in section 4(1)(a), where-
B = the period from the date of the marriage or the date of the commencement of the member’s membership of the fund, if later, up to the date on which the benefit became payable; and
C= the period from the of commencement of the member’s membership of the fund to the date on which the benefit became payable.
(2) The member’s retirement fund must, if notified in the prescribed form of the non-member spouse’s right to share in the member’s retirement fund benefits, pay to the non-member spouse his or her share of those benefits direct from the fund. .
Division of benefit in polygamous marriages
6. If during any period in respect of which a non-member spouse is entitled to a share of the member’s retirement fund benefits in terms of sections 3, 4 or 5 the member was married to more then one spouse, the non-member spouse’s share of those benefits in respect of any such period shall be determined in accordance with the formulae contemplated in the said sections but the factor of ½ must in respect of any such period be changed to 1/x where x denotes the number of spouses, including the member, in existence during the period concerned.
Regulations
7. The Minister may make regulations prescribing-
(a) the form in which an administrator of a retirement fund must be notified of any division of retirement fund benefits of a member;
(b) the costs incurred by a retirement fund in giving effect to the provisions of this Act which are recoverable from a member or a non-member spouse;
(c) any other matter that may or must be regulated in order to give effect to principles underlying the provisions of this Act.
Retirement fund benefits excluded from joint estates
8. No retirement fund benefit accumulated in respect of or paid to a member as contemplated in this Act forms part of the joint estate of such member and the non-member spouse in respect of whom the division of the benefit is made, and no share of such benefit to which the said non-member spouse is entitled forms part of the said joint estate.
Amendment of section 37A of Act 24 of 1956
9. Section 37A of the Pension Fund Act, 1956 (Act No. 24 of 1956), is hereby amended by the substitution for subsection (1) of the following subsection:
“(1) Save to the extent permitted by this Act, the Income Tax Act, 1962 (Act No. 58 of 1962), [and] the Maintenance Act, 1963 (Act No. 23 of 1963) and the Division of Retirement Fund Benefits on Divorce Act, 19...., no benefit provided for in the rules of a registered fund (including an annuity purchased or to be purchased by the said fund from an insurer for a member), or right to such benefit, or right in respect of contributions made by or on behalf of a member, shall not withstanding anything to the contrary to contained in the rules of such a fund, be capable to being reduced, transferred or otherwise ceded, or of being pledged or hypothecated, or be liable to be attached or subjected to any form of execution under judgment or order of a court of law, or to the extent of not more than three thousand rand per annum, be capable of being taken into account in a determination of a judgment debtor’s financial position in terms of section 65 of the Magistrates’ Court Act, 1944 (Act No. 32 of 1944), and in the event of the member or beneficiary concerned attempting to transfer or otherwise cede, or to pledge or hypothecate, such benefit or right, the fund concerned may withhold or suspend payment thereof: Provided that the fund may pay any such benefit or any benefit in pursuance of such contributions, or part thereof, to any one or more of the dependants of the member or beneficiary or to a guardian or trustee for the benefit of such dependant or dependants during such period as it may determine.”.
Amendment of Act 70 of 1979
10. The Divorce Act, 1979(Act No 70 of 1979), is hereby amended -
(a) by the deletion of the definitions of “pension fund”, “pension interest” and “rules” in section 1; and
(b) by the deletion of subsections (7) and (8) of section 7.
Amendment of sections 5 of Act 88 of 1984
11. Section 5 of the Matrimonial Property Act, 1984 (Act No. 88 of 1984), is hereby amended by the addition of the following subsection:
“(3) (a) No benefit paid to or which is being received by a member of a retirement fund or any other asset which the member acquires by virtue of his or her possession or former possession of such benefit, and no right which such a member has to the payment of retirement fund benefits in the future, shall for purposes of determining the accrual of that member’s estate upon divorce, form part of the said member’s estate.
(b) No right which the spouse of a member of a retirement fund may have in terms of the Division Of Retirement Fund Benefits On Divorce Act, 19...., or any other law to a share of the member’s retirement fund benefits and no part of such benefits which has been or is being paid to such spouse shall for purpose of determining the accrual of the estate of such spouse in divorce, form part of his or her estate.”.
Application of Act
12. (1) Subject to subsections (2) and (3), this Act applies in respect of all marriages dissolved by divorce or annulment after the commencement of this Act.
(2) Any right which a party to a divorce action or annulment proceedings instituted before the commencement of this Act may have in respect of the retirement fund benefits of the other party to such action must be determined as if this Act had not been adopted.
(3) Spouses who have in terms of their antenuptial contract excluded community of property, community of profit and loss and the accrual system in respect of their marriage shall for purposes of section 2(2) be deemed to have explicitly excluded the sharing of retirement fund benefits in accordance with this Act, unless they have by written agreement between them made the said provisions applicable to them in the event of their divorce.
Short Title and commencement
13. This Act shall be called the Division of Retirement Fund Benefits On Divorce Act, 19...., and shall commence on a date fixed in the Gazette by the President.
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