A retirement fund is not obliged to pay the former spouse of a member any share of the fund if the member leaves the fund before their divorce has been finalised, even if the divorce order awards the non-member former spouse a share of the fund.
The only way the non-member former spouse can claim his or her share after the divorce order has been granted is by suing the former fund member.
This is the ruling of deputy Pension Funds Adjudicator Muvhango Lukhaimane following a complaint from Ms BW against the Alexander Forbes Retirement Fund and Alexander Forbes Financial Services.
Mr EW was a member of the Alexander Forbes Retirement Fund from July 2007 to March 2010. His marriage was dissolved on November 29, 2010, but the divorce proceedings were already under way when Mr EW left the retirement fund.
His wife, Ms BW, applied for an interdict in April 2010 to prevent the payment by the Alexander Forbes Retirement Fund of her husband’s pension interest until the divorce had been finalised.
A year later, Ms BW was advised that the divorce order, in terms of which she was allocated half of her former husband’s pension interest, could not be enforced, because the fund had paid Mr EW his full withdrawal benefit upon his exit from the fund.
In her complaint, Ms BW says she was assured that no payment would be made to Mr EW until the divorce process was finalised, and she submitted the final divorce order to Alexander Forbes after the completion of the divorce proceedings.
In its response, the fund submitted that the final divorce order, which directed the fund to pay half of Mr EW’s pension interest to the complainant, was obtained eight months after he had left his job.
The fund said the divorce order is not binding on the fund, because the member spouse had left the fund before the divorce order was granted. It argued that, for a divorce order to be valid and enforceable against the fund, there must be an amount available to share.
Mr EW became entitled to a withdrawal benefit on leaving the fund.
The fund told the deputy adjudicator that Ms EW was still able to claim her share of the pension benefit awarded to her former spouse in his personal capacity.
In her determination endorsing the view of the fund and Alexander Forbes, Lukhaimane says: “The fact that there was an interdict preventing the payment of any benefit to Mr EW does not detract from the fact that there was no valid and binding divorce order as at the date of his exit from the fund.
“The first respondent (the fund) was bound in terms of its rules to pay Mr EW his full fund credit upon his withdrawal.”