CALCULATION OF ACCRUAL
- When determining and calculating the value of the accrual of an estate of spouse, whether married in community of property or out of community of property with accrual, one must look at the definition of Pension interest as defined in Section 1 of the Divorce Act.
- If a spouse is a member of a pension fund which excludes a retirement unity fund, is filed in terms of Section 1(1) of the Pension Funds Act 24 of 1956, the pension interest is the benefit to which he would have been made entitled to should he terminate the membership of the fund, be dismissed or resign from his employment. It is imperative therefore, that one does not necessarily look at the total value of the Pension Fund but rather the pension Interest as at the date in which that person resigned etc.
- If however that spouse is a member of a Retirement Annuity Fund, then the calculation of the pension interest is equal to all the contributions he or she has made to the fund up until the date of the divorce; together with annual simple interest on those calculations calculated not exceeding the fund return on the non-member’s spouses portion and spouses pension interest.
- It is therefore only the amount of pension interest as at the date of divorce that is deemed to be part of that spouse’s / member’s assets. Subsequent interest and growth thereafter must not be included.
- However, if the parties are unable to settle as to what amount of the pension fund or retirement fund would be payable across, then the relief sought, in terms of the divorce order would be along the lines of Section 7(8)(a)(i) of the Divorce Act. This allows for the court to make an order compelling the Spouse’s/ Member’s Pension Fund to pay any part of the pension interest that is due to the non-member’s spouse directly to the non-member when the pension accrues to the member. Therefore the Pension Fund confers discretion upon the Court whether or not to make such an order.
- Section 7(8)(a) does not deal with the issue whether or not the non-member is entitled to share the member’s interest. Therefore, it is best for section 7(8)(a) to be included in the order however, even if it is not, it does not necessarily deprive the non-member of his or her right to share in the member’s pension interest if of course that spouse’s matrimonial property system permits sharing i.e. in community of property and also with accrual.
- Parties must be alive to the above aspects when considering divorce. By agreeing to an Ante nuptial contract with accrual or being married in community of property, a spouse rights to the others estate, even if in part, becomes an automatic right. Parties must be well guided by their attorneys before the marriage and before instituting divorce proceedings.