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Divorce proceedings often raise complex financial issues, particularly where retirement benefits are concerned.
One of the most contentious and technically challenging areas relates to the division and payment of pension interest to a non-member spouse.
This is governed by a combination of the Divorce Act 70 of 1979—especially sections 7(7) and 7(8)—and the Pension Funds Act 24 of 1956, primarily section 37D.
Three recent decisions—
Bidvest South Africa Retirement Fund v Siphuma,
– have highlighted both the legal requirements and the practical pitfalls of such orders. More specifically section 37D(1)(d)(iA)
These cases underscore the need for precision in drafting divorce orders and confirm the strict legal framework within which pension funds operate.
The starting point is section 7 of the Divorce Act, which regulates how courts may divide assets and award maintenance during divorce. Subsections 7(7) and 7(8) are particularly important when it comes to pension interest:
Section 7(7)(a) deems the pension interest of a party to be part of their assets for purposes of dividing matrimonial benefits, unless excluded by Ante Nuptial Agreement.
Section 7(8) empowers a court to order that a portion of the pension interest be paid by the fund directly to the non-member spouse, once benefits accrue.
This legislative structure gives effect to the non-member spouse’s right to share in the pension interest—but only if the Court Order complies precisely with the statutory requirements. Moreover, Section 37D(4) of the Pension Funds Act allows such deductions only where the Order is clear, unambiguous, and names the fund concerned.
Section 37A of the Pension Funds Act further safeguards pension benefits by explicitly prohibiting the reduction, transfer, pledge, or execution against such benefits, subject only to limited exceptions.
This means that, generally, pension benefits cannot be attached or executed upon under any Court Order or judgment, ensuring the member’s retirement savings remain protected.
However, the section allows pension funds to pay benefits to dependents or trustees as determined by the fund and permits certain debt reductions under narrowly defined circumstances, such as arrear contributions owed to the fund.
This statutory protection emphasises the limited circumstances under which pension benefits can be accessed or diminished, underscoring the importance of complying with the Divorce Act’s mechanisms (sections 7(7) and 7(8)) and the Pension Funds Act’s requirements to lawfully divide pension interests during divorce.
Let’s explore how these principles played out in recent jurisprudence.
This case considered whether a pension fund may refuse to comply with a Divorce Order that contains a technical error—specifically, the incorrect name of the fund—even when all other identifying information is correct.
Mr. Siphuma was a member of the Bidvest South Africa Retirement Fund. His divorce order directed that 50% of his pension interest be paid to his former spouse, Mrs. Siphuma.
The order, however, incorrectly referred to the Bidvest Glassock Provident Fund. Despite the fund and employment numbers being correct, the fund refused to process the payment, arguing that the Order was unenforceable due to the naming error.
The Financial Services Tribunal (FST) applied the common law principle “falsa demonstratio non nocet”—an incorrect description does not invalidate a legal document if the intent is clear.
The FST concluded that the Divorce Order was enforceable. It held that funds must assess such orders contextually, not rigidly, and are required to act reasonably and in accordance with the objectives of section 7(8) and section 37D.
Pension funds must not delay payment due to obvious errors in the naming of the fund, particularly where the Order includes sufficient identifying information. However, the Order must still comply substantively with sections 7(7) and 7(8) of the Divorce Act.
This case illustrates the consequences of failing to comply strictly with statutory requirements.
Mrs. M sought to claim 50% of her former husband’s pension interest, as stipulated in a 2000 Divorce Order. The Settlement Agreement entitled her to half of the “pension fund of the defendant accruing from the date of divorce to the date of payment.” However, the Order failed to name the fund, and Mrs. M did not act on the order until nearly 20 years later—after her former husband had passed away.
When Mrs. M approached the fund, it declined to make payment on the basis that the order was not binding, it did not comply with section 7(8) of the Divorce Act or section 37D(1)(d)(iA) of the Pension Funds Act.
Furthermore, the fund had already distributed benefits in accordance with section 37C, as Mrs. M was neither a nominee nor a dependent at the time of death.
Once benefits are distributed in terms of section 37C, a non-member spouse without a valid Section 7(8) Order cannot claim against the fund.
The High Court dismissed Mrs. M’s Application. The court emphasised that unless the Divorce Order names or sufficiently identifies the pension fund and complies with section 7(8), the fund is under no obligation to give effect to the payment. Mrs. M was directed to pursue her claim against the deceased estate—a more difficult and uncertain route.
This case underscores the rigidity of section 7(8): a Divorce Order not compliant with its provisions is unenforceable against the fund. Even a valid Settlement Agreement between spouses cannot override these legislative requirements.
The third case examines how failing to invoke section 7(8) and section 37D can undermine the effectiveness of asset division—even when the parties agree to include pension benefits.
Mrs. K’s Divorce Order appointed a receiver, Mr. Swartz, to divide the joint estate, including the pension benefits. Although Mr. K agreed to transfer over R2.4 million (part of it via a preservation fund to a fund of Mrs. K’s choice), he ultimately withdrew a lesser amount—presumably after tax—and failed to pay the agreed sum.
Mr. Swartz argued he had fulfilled his duties, even though the pension benefits were never liquidated or transferred as stipulated.
The High Court ruled that Mrs. K was still entitled to the full agreed amount. The court highlighted that the problem could have been avoided if the parties had obtained a proper Order in terms of section 7(8). Because they did not, Mrs. K had to rely on Mr. K directly, instead of the fund—a situation the legislation seeks to avoid.
The court cited the SCA’s decision in Old Mutual Life Assurance Co (SA) Ltd v Swemmer (2004), which stated that Divorce Orders and Settlement Agreements must be precisely formulated to fall within sections 7(7) and 7(8), ensuring the fund need only perform an administrative function.
Section 7 of the Divorce Act provides a structured approach to financial settlement during divorce:
Section 7(1) allows courts to make Orders in accordance with a written settlement.
Section 7(2) provides judicial discretion in awarding maintenance, based on a range of equitable considerations.
Sections 7(3)–7(6) deal with redistributive remedies in certain out-of-community-of-property marriages and, more recently, Muslim marriages (added by Act 1 of 2024).
Sections 7(7) and 7(8) of the Divorce Act—our primary focus—set out the mechanism through which pension interests can be considered and allocated in divorce proceedings.
It is important to note that the Financial Sector Conduct Authority (FSCA) and pension funds apply Directive PF 3/2007, which requires strict compliance with section 7(8) when processing Divorce Orders involving pension benefits.
This means that any divorce order directing the division of pension interests must clearly reflect the requirements set out in the Act to be enforceable by the fund.
The recent Constitutional Court ruling in EB v ER (2023) marks a significant development in the interpretation of section 7(3) of the Divorce Act.
The Court declared the section unconstitutional to the extent that it excluded spouses married out of community of property after the commencement of the Matrimonial Property Act of 1984.
This landmark judgment has effectively expanded the scope of section 7(3) to allow courts to grant redistribution orders in such marriages, thereby addressing historical inequities.
Notably, the Court also held that redistribution under this section may be applicable even after the death of a spouse, signaling a more inclusive and equitable approach to matrimonial property law in South Africa.
Pension interest remains a valuable and often contested asset in divorce proceedings. The trilogy of recent cases demonstrates the strict approach courts and pension funds adopt when interpreting Divorce Orders. Sections 7(7) and 7(8) of the Divorce Act, read with section 37D of the Pension Funds Act, form a rigid statutory framework.
Proper legal drafting, informed advice, and careful compliance are essential to safeguard the rights of both member and non-member spouses. As the courts have made clear: precision matters.
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