Recent Changes – Government Pension Funds and Divorce Settlements

defamationGovernment employees who are members of the Government Employees Pension Fund (‘GEPF’) can breathe a sigh of relief, as their pension interest will no longer be subject to the ‘debt’ approach when distributing pension interest when enforcing terms of a Divorce Settlement Order.

The previous rules were structured in such a way that the divorce payout was included as a debt to the pension interest. In this way, members could owe money to the GEPF when they retired.

The new rules, which came into effect 1 August 2019 under the guise of the Government Employees Pension Law Amendment Bill, will now reduce the number of years of service accrued in equal proportion to the benefit due to the spouse in terms of the Divorce Order.

In practical terms upon retirement, the member will be paid their full benefit after allowing for the reduced pensionable service. In simple terms, if a member accrued ten years of service at Date of Divorce and the spouse is paid 50% of the of pension interests, the members years of service will be reduced to 5 years. Members will be able to pay in the difference or increase their monthly contributions to rectify the ‘gap’.

It is essential to note that members who have already settled their divorces in terms of the old method have up until 22 May 2020 to choose which method they would prefer failing which they will be automatically converted to the new ‘service reduction’ method.

The GEPF is set to issue out directives to its members, but if any issues should arise regarding pension interest contact SchoemanLaw Inc.

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