Circumventing Section 7(8)(a)(I) of the Divorce Act 70 of 1979 and Section 37D of the Pension Funds Act 24 of 1956 through strategic resignation : CNN v NN 2023 (5) SA 199 (GJ)

Abstract

Suppose that the High Court dissolved a couples’ marriage on 14 October 2022 and incorporated the parties’ signed settlement agreement in its order. Unbeknown to the divorce court and the wife, the husband had resigned from his employment and exited his retirement fund on 7 May 2021. This was roughly two months after being served with the divorce summons. For all practical purposes, when the court granted the divorce order, the husband was not a member of a retirement fund. Consequently, he did not have a pension interest from which the ex-wife could be allocated a portion (CNN v NN 2023 (5) SA 199 (GJ) para 4 (‘CNN’)). It transpired that at the time the divorce order was granted, the husband’s pension benefits were still held by the fund. Following the divorce order that assigned her 50 per cent of the husband’s pension interest, the ex-wife approached the fund with the aim of requesting payment of what she believed was due to her (CNN para 5). The fund advised her that the ex-husband’s pension benefit had accrued to him and that he was no longer a member of the fund. Furthermore, the fund informed her that the divorce order did not comply with the legislative prescripts and could not be enforced. In turn, the fund’s Divorce and Maintenance officer advised that for her to be assisted, she needed to provide the fund with a divorce order directing it to pay a pension benefit as opposed to a pension interest. Accordingly, what the fund was holding on behalf of the husband was his accrued pension benefit and his pension interest was nil. As a result, the divorce order could not be enforced (CNN para 5). The contents of the letter from the fund caused the ex-wife to launch an application to amend the divorce order which incorporated the settlement agreement by amending the phrase ‘pension interest’ and replacing it with ‘accrued pension benefit’ (CNN para 6).