A critical aspect of divorce proceedings in South Africa is the division of retirement accounts and pensions. Understanding the legalities around this division is crucial for both parties to ensure a fair settlement. This article explores how retirement savings and pensions are divided during a divorce in South Africa.

The Legal Framework for Division of Retirement Assets

In South Africa, the division of retirement assets during a divorce is governed by the Divorce Act and the Pension Funds Act. These laws provide guidelines on how retirement funds are to be treated when a couple goes through a divorce.

Marital Property Regimes and Pension Division

1. In Community of Property: For couples married in community of property, retirement assets are generally considered joint assets and are divided equally between the spouses.

2. Out of Community of Property with Accrual: The retirement assets accumulated during the marriage are typically subject to division based on the accrual system.

3. Out of Community of Property without Accrual: Each spouse retains their individual retirement assets unless there is an agreement to share them.

The Process of Dividing Retirement Assets

• Court Order: The division of retirement assets is formalized through a court order. This order must specify the amount or percentage of the retirement benefit that is to be paid to the non-member spouse.

• Valuation of Assets: Accurate valuation of retirement assets is essential. This often involves determining the value of the assets at the date of divorce.

Tax Implications

Dividing retirement assets can have significant tax implications. It's important to understand these implications to avoid unexpected tax liabilities.

Special Considerations

• Deferred Benefits: The division of deferred benefits, where the member spouse has not yet retired, requires careful consideration.

• Maintenance and Child Support: In some cases, retirement assets may be considered when determining spousal maintenance and child support.

The Role of Financial and Legal Experts

Seeking advice from financial planners and attorneys is highly recommended. They can provide guidance on:

• Negotiating Settlements: Crafting an agreement that protects your financial interests.

• Understanding Legal and Tax Implications: Navigating the complex legal and tax aspects of dividing retirement assets.

Conclusion

The division of retirement accounts and pensions in a South African divorce is a nuanced process that requires a clear understanding of the legal framework and the marital property regime under which the couple is married. Proper valuation, legal guidance and financial advice are key to ensuring a fair and equitable division of these assets.

Barter McKellar’s divorce attorneys have extensive experiencing on advising on all aspects of divorce matters. If you would like to find out more, contact our offices today to schedule a consultation with one of our specialist divorce law lawyers.