‘Pension Fund Amendment Bill must supersede Divorce Act’

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The Standing Committee on Finance has heard that the proposed amendments to the public sector pension laws that will allow for a two-pot retirement system contradicts the Divorce Act. Some of the stakeholders who made submissions to the committee are proposing that the Pension Fund Amendment Bill must supersede the Divorce Act.

The amendments are set to come into effect on the 1st of September this year.

Stakeholders who made submissions on the first day of the hearings have welcomed these amendments, saying they will provide relief to millions of struggling workers by preventing them resigning before accessing their pension while at the same time preserving two thirds for retirement or retrenchments.

However, the Association for Savings and Investment South Africa (ASISA) says it is concerned about the contradictions with the Divorce Act.

“The way the law works is that the Divorce Act will govern divorcing parties and the pension funds act will govern pension funds and you’ve got both sides having completely different provisions. That will be enormously problematic. So, who is to be resolved … we need to really put our heads together and work that out. Hopefully, a line in the pension fund act overriding the divorce act will work,” says Rosemary Lightbody from ASISA.

The National Treasury says this matter has been taken into consideration.

“When drafting the amendments to the public sector pension laws, we came up with the application clause, which we have inserted, which will trump the divorce act,” says Nomalizo Bulisile from National Treasury.

ASISA also says there are some sections in the amendments that are not required for the two-pot system. They include payment of divorce awards to a non-member spouse out of pension income.

The association says this is a complete change from the current position, that on divorce, retirement fund capital is shared.