If you dodge your maintenance obligations, your children may be able to claim from your retirement fund.
In a recent High Court case in Durban, the judge ruled that a
pension fund can withhold a lump-sum benefit to pay outstanding maintenance, as well as to secure future maintenance obligations.
The judge found that Sifiso Khanyile, a member of the Beacon Sweets & Chocolates Provident Fund, failed to take his maintenance obligations seriously, and ruled that Khanyile's provident fund make monthly maintenance payments to his two children.
The mother of the two minor children, aged 15 and 17, had obtained a maintenance order against Khanyile that he pay R200 a month for each child. But a year later, Khanyile defaulted on the payments, and his former employer, Beacon Sweets & Chocolates, informed the maintenance officer that Khanyile had resigned specifically to avoid his maintenance responsibilities.
The court ordered the fund to withhold a lump sum from the R55 000 owed as a withdrawal benefit to Khanyile, from which the fund was to pay R200 maintenance for each child.
Three sums of money had previously been attached from Khanyile's pension fund under a warrant of execution for arrears maintenance, but the mother of the children wanted the fund to set aside a sum of money for future maintenance.
The fund refused to do so, and her complaint was also dismissed by the Pension Funds Adjudicator.
Explaining the reason for dismissing the complaint, Lisa Shrosbree, an assistant adjudicator, says the only argument made in the complaint submitted to the adjudicator was that, in terms of the Maintenance Act, the children's mother had the right to have Khanyile's withdrawal benefit withheld to secure payment of future maintenance to her children.
Dealing exclusively with that argument, the adjudicator held that the Maintenance Act only provided a remedy in respect of arrear maintenance and therefore the complainant could not rely on it to secure payment of future maintenance.
The High Court agreed with the adjudicator's interpretation of the Maintenance Act. However, the judge went beyond the Maintenance Act. He also looked at the Pension Funds Act, constitutionality principles and the common law duty of support and other considerations, and found that the fund was entitled to withhold a pension benefit to secure payment of future maintenance.
Andre Oosthuizen, a labour advocate from Cape Town, says pension benefits may not be attached in execution except under the Pension Funds Act, the Maintenance Act and the Income Tax Act. Your fund may also pay a benefit to the dependants of a member or former members.
At a recent meeting of the Pension Lawyers' Association in Cape Town, Oosthuizen said your fund's trustees have a duty of care not only to you, as a member of the fund, but also to your dependants, and that trustees might get into trouble if, after paying you your benefit, there are later claims from dependants.
Role of trustees
Before making payments, trustees should possibly find out if members have maintenance obligations. But, Oosthuizen says, he does not believe trustees would be liable if members deliberately concealed their maintenance obligations from the trustees. He says trustees cannot be expected to roam the country looking for unrecorded dependants.
You, as the member of a retirement fund, should be given the opportunity to be heard prior to your fund withholding any benefits due to you.
Oosthuizen also raised the issue of whether the Pension Funds Act should be amended to include other classes of claimants to whom retirement fund members owe money. There may be instances where members owe money but their pension benefit is the only asset they have, Oosthuizen says.
"If the taxman, your employer and your dependants can make claims on your retirement money, there may be other classes of claimants that are worthy of protection." (Your employer is only entitled to recover from your fund amounts which you have acknowledged that you owe - such as a housing loan - or if your employer has a court judgment against you.)
Such claimants can, for instance, include a person who has been seriously assaulted by a member who has been successfully sued for damages. It may also include a member of the public who has been defrauded by a member of a pension fund.