Johannesburg - One of the many changes divorce brings about is the need to take a new look at retirement planning, says Sorè Cloete, legal manager at Old Mutual.
She answers a few frequently asked questions:Do I have any rights to my partner’s pension fund benefits at divorce?
Upon divorce, you may be entitled to a share of your former spouse's retirement savings, depending on the provisions of the divorce order.
For many years, it was the case that the non-member spouse could not obtain a share in the member’s retirement fund before his retirement.
But this changed in 2007, and a non-member spouse may now receive a share of the member’s retirement fund upon divorce (if the divorce order provides for it), even where the divorce takes place before the retirement date. Does your marital regime have an impact on this?
Yes, your marital contract determines your rights in this regard.
If you are married in community of property, or with an antenuptial contract with accrual, then the pension savings form part of the joint assets, which can be shared at divorce.
If you are married out of community of property (with an antenuptial contract and no accrual), there is no joint estate, so no claim to pension fund savings.
Is there tax payable on this money?
It depends on the date of the divorce order.
If the divorce order was granted prior to September 13 2007, the payment to the non-member spouse will be tax-free irrespective of the date of payment to the non-member spouse.
If the divorce order was granted after September 13 2007, the non-member will be responsible for the tax and such tax is calculated as a withdrawal.How does this impact on my retirement provision?
If you are the pension fund member who will lose a portion of your retirement savings due to divorce, then you may have a shortfall at retirement and will need to supplement this with additional savings for retirement.
For the partner receiving a portion of their spouse’s pension fund savings, it is important not to view this as a windfall.
Many married people leave retirement planning up to one spouse (often the husband).
Divorce is often a trigger for a woman to realise that she needs to have her own retirement plan.
A lump sum of money received at divorce can be a good way to kickstart to your own retirement plan, and you can also avoid the tax consequences if you transfer it to a retirement vehicle.
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