Divorce Orders

The ISASA Retirement Fund provides clear guidelines and support for members going through a divorce to ensure that the division of pension benefits is handled efficiently and in accordance with legal requirements. Here's what you need to know:

Divorce is a significant life event that can have wide-ranging financial implications, especially regarding retirement savings. A "pension interest" deduction allows a non-member spouse to be eligible for a portion of the member spouse’s pension benefit from the date of divorce. It is important to ensure that the wording of the court order and settlement agreement aligns with legal requirements, as an incorrectly worded order will not be enforceable by the Fund. The divorce payment will be deducted proportionally from the Vested Pot, your Savings Pot and your Retirement Pot.

Key Requirements for a Binding Divorce Order:

• Identification of the Fund: The order must clearly identify the ISASA Retirement Fund.
• Court Order Specificity: The court must explicitly order the Fund to pay the specified amount to the non-member spouse.
• Clear Amount/Percentage: The order must state the exact amount or percentage of the pension interest due to the non-member spouse. This can be expressed as a percentage or Rand value, not exceeding 100% of the pension interest.
• Timing of the Order: The final divorce order must be granted before the member's termination of service (resignation, retrenchment, dismissal, or retirement). If the member exited the Fund before the divorce order was granted, the non-member spouse is not entitled to any benefit from the Fund but may claim directly from the former spouse.

Suggested Wording for Divorce Orders: To ensure the order is enforceable, the following wording is recommended:

“It is recorded that the Plaintiff is a member of the ISASA Retirement Fund. The Plaintiff hereby agrees that the Defendant shall be entitled to a [specified percentage] share of the Plaintiff’s pension interest in such Fund (as defined in section 1 of the Divorce Act No. 70 of 1979) as at the date of divorce. An endorsement shall be made in the records of the Fund that the Defendant’s share of the Plaintiff’s pension interest is payable to the Defendant. The Fund shall pay to the Defendant his/her share of the Plaintiff’s interest as referred to herein within 60 days of being informed of how the amount must be dealt with in accordance with the Defendant’s election.”

Non-Member Spouse:

• If the non-member spouse elects to take a cash lump sum, the benefit will be taxed in their hands.
• If the benefit is transferred to another retirement Fund, it is transferred tax-free. However, the non-member spouse will be liable for tax on the benefit when they retire or withdraw from that retirement Fund.

Member Spouse:

There are costs involved for the member when a portion of their pension interest is paid to the former spouse.

1. Submit Divorce Order and Settlement Agreement:
   • The non-member spouse must submit the divorce order and settlement agreement to the Fund Administrator.
   • The non-member spouse should also indicate whether they want the benefit paid as cash or transferred to another Fund.
2. Election Period:
   • The non-member spouse has 120 days to elect how they wish to receive their benefit. If no election is made within this period, the Fund will request an election.
3. Payment Processing:
   • The Fund will process the payment within 60 days of receiving the necessary documents and instructions.

Beneficiary Nomination:

Regularly update your beneficiary nomination form to ensure that your benefits are distributed according to your wishes.

Legal and Financial Advice:

Consult with a legal advisor to ensure that your divorce order is correctly worded.

Seek financial advice to understand the implications of your pension interest distribution and to plan accordingly.