Divorce and your retirement savings Your pension or provident Fund savings form part of your overall assets. Understand what happens to your retirement benefits if you divorce your spouse.

Legislation now makes provision for a member’s Fund balance to be shared in the event of divorce. However, many problems arise from incomplete divorce orders.

Firstly, if a divorce order or decree for the dissolution of a customary marriage is made against your retirement Fund benefits, a certified copy of the order must be sent immediately to the administrators of the Fund. Provided the divorce order contains the required information, the Fund will pay accordingly. The Fund can then notify both parties how much will be paid and to whom.

The divorce payment will be deducted proportionally from the Vested Share and Non-Vested Share in your Vested Pot, your Savings Pot and your Retirement Pot.

To ensure that the benefit can be paid from the Fund to your ex-spouse, you should ensure that the divorce order contains the following:

• The name of the Fund (The Hospitality and General Provident Fund)
• The percentage (0-100%) or Rand value to be paid to the ex-spouse
• It must be clear that a portion of your “pension interest” is being awarded
• The relevant Fund (s) must be expressly ordered to (1) pay over the awarded portion of your pension interest to your ex-spouse or a fund of your ex-spouse’s choice and (2) endorse its records accordingly

If the Divorce Order does not make these provisions, the Administrator of the Fund has no obligation to pay the ex- spouse any portion of the Member’s benefit.

Please see the suggested clause below:

The non-member spouse [NAME SURNAME] is entitled to [XX%] of the member’s [NAME SURNAME] Fund Balance in the The Hospitality and General Provident Fund. The Hospitality and General Provident Fund is ordered to pay this amount to the non-member spouse.

When will the benefit be paid to my ex-spouse?

The payment will be processed once you have provided the Fund with your Divorce Order. The ex-spouse must complete a divorce application form. The Administrator has 60 days to make payment after receipt of the final Divorce Decree and the divorce application form.

Who will pay the tax on the benefit paid to my ex-spouse?

Previously, the Member paid the tax on the ex-spouse’s benefit, but with effect from 1 March 2009, the ex-spouse will pay the tax on the ex-spouse’s benefit. With effect from 1 March 2009, the ex-spouse may transfer the amount tax-free to a preservation fund.