Two-Pot Pension System and Divorce in South Africa: What Divorcing Spouses Need to Know

Two-Pot Pension System and Divorce in South Africa

For many divorcing spouses, the most valuable asset in the marriage is not the house or the vehicles — it is a retirement fund. Since the two-pot retirement system came into operation on 1 September 2024, divorce clients have wanted to know what it means for them: whether a spouse can suddenly withdraw retirement money, whether a non-member spouse’s claim is at risk, and how a settlement agreement should now be worded.

This article explains how the two-pot pension system and divorce in South Africa interact in practice. Pension interest in divorce in South Africa is one of the most fact-sensitive issues a divorcing client deals with, and the two-pot retirement system and divorce have brought it firmly back into focus. The information below is general; the correct approach depends on the type of fund, the matrimonial property regime, the wording of the divorce order and the rules of the specific fund involved.

What pension interest means in a South African divorce

Understanding pension interest in divorce in South Africa starts with the statutory definition. “Pension interest” is a defined term in the Divorce Act 70 of 1979. In broad terms it refers to the benefit a member spouse would have been entitled to from the fund if their membership had been terminated on the date of the divorce on account of resignation (for ordinary pension and provident funds), or the member’s contributions plus prescribed simple interest up to the date of divorce (for retirement annuity funds).

That definition matters because pension interest is not the same as the future pension a member spouse might one day receive. It is a calculated value, fixed by reference to the date of divorce.

It is also important to understand what pension interest is not. Pension interest is not the same as:

spousal or child maintenance;
an accrual claim under the Matrimonial Property Act;
a forfeiture of patrimonial benefits;
a general claim against marital assets.

Treating any of these as interchangeable is one of the most common mistakes in divorce settlements involving retirement funds.

The legal framework: the Divorce Act, the Pension Funds Act and the two-pot amendments

The legal architecture around the two-pot pension system and divorce in South Africa rests on three pieces of legislation that must be read together. Issues involving the two-pot retirement system and divorce now bring all three into close interaction.

Section 7(7) of the Divorce Act provides that, in determining the patrimonial benefits to which the parties to a divorce action may be entitled, the pension interest of a party is deemed to be part of that party’s assets — subject to important exceptions. The most significant exception is that this rule does not apply to a marriage out of community of property entered into on or after 1 November 1984 in terms of an antenuptial contract that excludes community of property, community of profit and loss and the accrual system. The amount deemed to be part of the assets is also reduced by any amount that was paid over or awarded in a previous divorce.

Section 7(8) of the Divorce Act is the mechanism that gives the order practical effect. It allows the court granting the decree of divorce to order that any part of the pension interest of the member spouse, which is due or assigned to the other spouse, be paid by the fund to that other spouse when pension benefits accrue, and that the registrar notify the fund so that an endorsement is made in the fund’s records.

The Pension Funds Act 24 of 1956 governs how the fund administers benefits. The fund is bound to act in accordance with its rules, the pension legislation and the wording of the order it receives. It is not the fund’s role to repair vague wording or to guess what the parties meant. The Act now also contains its own definition of “pension interest” for the purposes of a court order under section 7(8)(a) of the Divorce Act — the member’s individual account or minimum individual reserve, as the case may be, determined under the rules of that fund on the date of the court order. Section 37D of the Pension Funds Act sets out the deductions a fund may make from a member’s benefit, including any portion of the pension interest assigned to a non-member spouse in a court order.

The Pension Funds Amendment Act 31 of 2024 introduced the two-pot framework with effect from 1 September 2024. Contributions to most retirement funds are now allocated across a savings component, a retirement component and a vested component. This has practical consequences for how a benefit is valued, how a deduction under a divorce order may be applied, and what information needs to be obtained from the fund.

This is a developing area. The article does not attempt to formulate one clause that will work for every fund or every order. The correct formulation depends on the facts, the fund involved and current attorney advice.

Two-Pot Pension System and Divorce in South Africa: How the Rules Interact in Practice

Anyone navigating the two-pot pension system and divorce in South Africa needs to keep three practical points in mind. Each of these layers shapes how the two-pot retirement system and divorce affect a particular fund and a particular client. The two-pot system has not removed pension interest from the divorce conversation; if anything, it has made disclosure and drafting more important.

In practical terms:

A member’s fund value must now be considered with reference to all components — the savings component, the retirement component and the vested component — not just a single overall balance.
Where a divorce order results in a pension-interest deduction, the deduction may be applied proportionately across the different components in line with the legislation and the fund’s rules. The parties should therefore not assume that the non-member spouse’s portion can simply be taken from one component only.
A member spouse may, in certain circumstances, be able to access the savings component during the marriage or while the divorce is pending. That possibility creates timing risks that did not exist in the same way before September 2024 — but, as set out below, the Pension Funds Act now also contains specific protections that a non-member spouse can trigger by notifying the fund.

Speak to an attorney before signing. If you are negotiating a divorce settlement that includes pension interest, a pre-signature review of the pension clause may prevent costly disputes after the order is granted. Contact Vermeulen Attorneys to arrange a consultation.

Can a non-member spouse claim the savings, retirement or vested component?

The short answer is: it depends. Each of the factors below shapes how the two-pot pension system and divorce in South Africa work together in any given matter.

A non-member spouse does not automatically receive half of the member’s pension. Whether there is a non-member spouse pension interest claim at all, and how it is calculated, depends on:

the matrimonial property regime;
the wording of the settlement agreement or the court order;
the type of fund (pension fund, provident fund, retirement annuity fund, preservation fund, government fund, in-fund pensioner annuity);
the rules of the specific fund; and
the requirements of the applicable pension legislation.

Any non-member spouse pension interest claim therefore needs to be tested against all of these factors before settlement is reached. The savings component is not “free” money for a divorcing spouse to claim. It forms part of the member’s retirement benefit and is subject to the same statutory framework. Where a properly drafted divorce order awards a portion of the pension interest to a non-member spouse, the fund will determine how the deduction is implemented across components in accordance with its rules and the legislation. This article does not deal with the tax treatment of any such payment; that requires specific tax advice.

For broader context on pension division in divorce, see our discussion of pension interests in late-in-life divorces, which addresses the considerations that arise when retirement-heavy estates are divided.

Savings-component withdrawals during divorce: the timing risk and the statutory protection

A savings component withdrawal during divorce is one of the practical flashpoints where the two-pot pension system and divorce in South Africa most directly collide. The pressing question is whether a member spouse can withdraw from the savings component before the divorce is finalised.

The savings component was designed to allow members limited in-service access to a portion of their retirement savings. That access does not pause automatically simply because divorce proceedings have started. A savings component withdrawal during divorce may therefore still be possible — which could affect the value reflected in the fund at the date of divorce and could become a source of dispute about disclosure, prejudice and the fairness of the settlement negotiations.

However, the Pension Funds Act now contains a specific protection. Where the fund has received written notification, with proof, that a divorce has been instituted as defined in the Divorce Act, the fund may not, without the consent of the non-member spouse, grant a loan or guarantee or permit a savings withdrawal benefit to be taken by the member. That prohibition applies until the divorce is finalised or until a court order is issued. The protection is not automatic — it depends on the fund being properly notified with the right supporting proof — but it is a meaningful statutory mechanism that did not exist in the same form before the two-pot amendments.

For the non-member spouse, the practical implications are:

raise pension-interest disclosure early in the proceedings, not at the end;
request updated benefit statements for every retirement fund;
include pension-related disclosure in any financial disclosure process;
where there is a real risk of a savings-component withdrawal or a fund-backed loan, consider notifying the fund in writing, with proof, that divorce proceedings have been instituted, so that the section 37D(3) protection can be triggered;
consider interim relief in appropriate cases.

These steps are fact-specific and may not all be necessary in every matter. Whether and how to notify a fund — and what supporting proof a fund will accept — is a question that should be addressed by an attorney who has reviewed the matter.

Why divorce-order wording matters for pension funds

Under the two-pot pension system and divorce in South Africa, the precise wording of the divorce order carries more weight than ever before. Pension interest wording in a divorce order is often the difference between an order the fund can implement and an order the fund must reject.

For a fund to implement a pension-interest order it generally needs the order to:

correctly identify the specific fund (its full name, and ideally the administrator);
identify the member by name and membership or policy number where applicable;
refer specifically to pension interest as defined in the Divorce Act, rather than to “the pension” in vague terms;
state the percentage or amount awarded to the non-member spouse with precision;
direct the fund to make payment or to endorse its records regarding that portion, in line with section 7(8) of the Divorce Act and section 37D of the Pension Funds Act.

A pension fund divorce order in South Africa that fails any of these requirements may be queried or rejected by the fund after the divorce is granted. A clause that simply says, for example, “the wife will receive 50% of the husband’s pension” is often not enough. The fund may not be properly identified, the membership number may be missing, and the order may not contain the directions the fund needs to implement it. Fixing a defective pension fund divorce order in South Africa after the fact means going back to court — at additional cost, delay and frustration.

Before signing any settlement that contains a pension-interest clause, think carefully before you sign a divorce settlement. Settlement agreements that are made orders of court can be difficult to undo.

What information to obtain from the retirement fund before settlement

Dealing with retirement savings in a divorce settlement requires accurate, up-to-date information from every retirement fund. Negotiating well in the two-pot pension system and divorce in South Africa environment starts there — a pension-interest clause should never be drafted from memory or from an old payslip.

Before negotiating the clause, a spouse should usually try to obtain:

updated benefit statements for every retirement fund (pension fund, provident fund, preservation fund, retirement annuity fund or other retirement fund);
the correct legal name of each fund;
the name of the fund administrator;
the membership or policy number;
payslips showing current retirement-fund contributions;
documents showing the vested, savings and retirement component balances;
proof of any savings-component withdrawal already made;
any correspondence from the fund or administrator;
the antenuptial contract, where the parties are married out of community of property;
any settlement proposals dealing with pension interest.

Where the value is significant, where there are several funds, or where there is a dispute about the fund value or component balances, expert input may be needed. This is also where a properly prepared financial disclosure affidavit in divorce becomes critical: a fair settlement that deals with retirement savings in a divorce settlement is only possible where retirement components, fund values and income are accurately disclosed.

Matrimonial property regime: why it changes the answer

The matrimonial property regime sits at the heart of the two-pot pension system and divorce in South Africa analysis. It also drives every non-member spouse pension interest claim.

Marriage in community of property: the joint estate generally includes the pension interest of each spouse, subject to the provisions of the Divorce Act.
Marriage out of community of property with accrual: the pension interest of a spouse may be taken into account in the calculation of accrual, depending on the wording of the antenuptial contract and the statutory framework.
Marriage out of community of property without accrual (post-1 November 1984 ANC excluding accrual): the pension interest is generally not deemed to form part of the member spouse’s assets for the purposes of section 7(7) of the Divorce Act.

The interaction between the regime, the antenuptial contract and the Divorce Act is technical. A non-member spouse should not assume there is a claim, and a member spouse should not assume there is none. Each matter requires its own analysis.

Common mistakes in pension-interest settlement clauses

Most of the recurring mistakes in pension-interest clauses since the introduction of the two-pot pension system and divorce in South Africa fall into the same patterns:

signing a settlement without confirming the current pension value;
assuming the pension will be split equally as a matter of course;
using vague wording such as “50% of the pension”;
failing to name the fund correctly;
failing to obtain updated benefit statements;
ignoring the two-pot component balances entirely;
not asking whether a savings-component withdrawal has already been made;
failing to notify the fund where a real risk of a savings component withdrawal during divorce or a fund-backed loan exists;
confusing pension interest with maintenance, accrual or forfeiture;
ignoring possible tax consequences;
leaving the pension issue “for after the divorce”;
waiving a pension claim without understanding what is being waived.

Across all of these, the same principle applies: pension interest wording in a divorce order should be drafted from current fund information, not assumed.

When to get attorneys involved

Many of the hardest questions about the two-pot pension system and divorce in South Africa become acute at predictable trigger points. Urgent legal advice is often appropriate where:

a member spouse is threatening to withdraw from the savings component during the divorce;
the member spouse is refusing to disclose fund information;
a settlement agreement is about to be signed without updated pension statements;
the pension interest is one of the largest assets in the matter;
the fund has queried or rejected a divorce order;
the member spouse is resigning, retiring, changing employment or planning to emigrate;
there is a dispute about whether the pension interest forms part of the joint estate or the accrual;
there are concerns that retirement benefits have been understated or hidden; or
there are several retirement funds or complex retirement products in play.

Where retirement assets sit alongside other significant assets, the issues often overlap with the considerations addressed in our guide to high-asset divorce in South Africa.

Get a settlement review before you sign. Reviewing the pension fund divorce order in South Africa before it is granted is one of the most cost-effective steps a divorcing spouse can take. If you are negotiating or about to sign a divorce settlement that includes a pension-interest clause, Vermeulen Attorneys can review the wording and the underlying disclosure before the order is finalised. Speak to our divorce team.

Frequently Asked Questions

Can my spouse withdraw from their pension during a divorce in South Africa?

A savings component withdrawal during divorce may, in certain circumstances, still be possible under the two-pot system while a divorce is pending. However, the Pension Funds Act now provides that, once the fund has been notified in writing, with proof, that divorce proceedings have been instituted, the fund may not, without the consent of the non-member spouse, permit a savings withdrawal or grant a fund-backed loan or guarantee until the divorce is finalised or a court order is issued. Triggering that protection requires the right notification — which should be handled with attorney input.

How does the two-pot pension system and divorce in South Africa affect a pension-interest claim?

The two-pot system has not removed the underlying concept of pension interest in section 7(7) of the Divorce Act. It has added complexity around how a member’s benefit is built up across the savings, retirement and vested components, how a divorce-order deduction is implemented, and what disclosure is needed before settlement. The Pension Funds Act itself now also contains a divorce-specific definition of “pension interest” — the member’s individual account or minimum individual reserve on the date of the court order.

Can I claim from my spouse’s retirement annuity in a divorce?

A retirement annuity fund may be subject to the pension-interest rules in the Divorce Act, but the calculation is different from that for an ordinary pension or provident fund and depends on the type of fund and the matrimonial property regime. The answer requires fund-specific advice.

What must a divorce order say for a pension fund to pay the non-member spouse?

A pension fund divorce order in South Africa should, at a minimum, correctly identify the fund, identify the member, refer specifically to pension interest, state the percentage or amount awarded to the non-member spouse and direct the fund to make payment or endorse its records in line with section 7(8) of the Divorce Act and section 37D of the Pension Funds Act. The fund’s own rules and the legislation may impose additional requirements.

What happens if the pension fund rejects the divorce order?

If the fund queries or rejects the order after the divorce, the parties may need to approach the court to vary or rectify the order so that it can be implemented. This causes delay and additional cost — which is why pension interest wording in a divorce order should be checked before the order is granted.

Does a pension-interest claim apply to all matrimonial property regimes?

No. A non-member spouse pension interest claim is generally not available in a marriage out of community of property entered into on or after 1 November 1984 under an antenuptial contract that excludes community of property, community of profit and loss and the accrual system. In other regimes the position is different and depends on the facts.

Do I need financial disclosure before agreeing to a pension clause?

Proper financial disclosure is generally essential before agreeing to a pension-interest clause. Without updated benefit statements for each fund — including the component balances under the two-pot system — it is very difficult to know what retirement savings in a divorce settlement are actually being divided or waived.

If your divorce involves the two-pot pension system and divorce in South Africa raises questions about retirement savings in a divorce settlement, a pension fund, a retirement annuity or a savings component withdrawal during divorce, obtain advice before you sign a settlement agreement or finalise the divorce order. Contact Vermeulen Attorneys to discuss your matter with our divorce team.