Has it come to a place where you want out of your marriage? Before considering getting a divorce, it’s important to understand the implications divorce can have on your finances, your pension fund included.

Type of Marriage Contract

The impact a divorce will have on your finance relies heavily on the type of marriage contract you entered into. If you were married in community of property, all retirement funds and pension funds make up your estate and will be split 50/50 in a divorce. If you were married out of community of property, spouses retain their own assets which includes pension funds, investments and retirement funds. If a couple was married with accrual, they will split what was earned above the amount they each entered the marriage with.

Was Your Pension Fund and Retirement Annuity Excluded?

If you got married out of community of property and entered into an ante nuptial contract using the accrual system, you can elect to exclude retirement funds and investments from the agreement so you each retain these in a divorce.

Calculate your interest

When determining the interest on pension and provident funds, the interest is the total benefit the spouse who is the member of the pension fund would have been entitled to in the event of withdrawing funds. When calculating interest on a retirement annuity, the total contributions to the fund up until the date of divorce plus simple interest are all that is needed.

Marriage duration does not impact pension interest

When your attorney calculates the amount of interest due to your spouse, the duration of your marriage is not a consideration. The only factory that determines the amount of interest is the type of fund and type of marriage contract.

Living annuities are excluded

A living annuity is a special financial product that pays you a guaranteed income dependent on the performance of the underlying investments. When you are retired and have resigned from your pension fund, you can use a living annuity to cover your expenses in addition to your lump sum payout. The non-member spouse is not entitled to make a claim for any payout from a living annuity.

Design a settlement that works for you

When embarking on the emotional journey of a divorce, it is important to come to a settlements agreements that works for both spouses. This is particularly true in the case of an amicable divorce where there is no need to squirrel away money and keep your former spouse from getting what they deserve out of the split.

Your spouse is liable for tax

Whatever your spouse gets awarded in your divorce settlement is liable for tax and this is to be taken into consideration when signing your agreement.