Our law is riddled with cases wherein various creditors, and employers, have attempted to claim from one’s pension fund.
Save for the exceptions, which we will deal with herein below, pension funds carry somewhat one sided protections – which favour the member of such fund.
The protections afforded are close to absolute, and ensure that pension funds can be retained for their intended use and/or benefit.
Despite the assurance provided by law, issues still arise from time to time, such as delayed benefit payments, as a result of creditors unduly attempting to claim from such funds.
So what protections are indeed actually provided?
Section 37A of the Pension Funds Act establishes a general rule or protection – pension funds member interests are protected from attachment, reduction, cession, and transfer.
As above, this protection is near absolute, and can be used in the face of creditors attempting to lay claim thereto (inclusive of with an order of Court – subject to the content thereof).
The near absolute nature thereof, however, invites a few exceptions, which are events in which claims can be made against a member’s benefit.
The exceptions accordingly include the following (mostly recorded in Section 37D of the Pension Funds Act):
1. Unpaid maintenance and/or maintenance claims.
Section 26 of the Maintenance Act provides for a common exception – should a party have failed to effect payment in terms of a maintenance order, and accordingly be in arrears, then such order may be enforceable through execution on property.
Section 26(4) furthers the rights of attachment to include the attachment of pension funds, annuities, and other similar benefits.
In the court case of Magewu v Zozo and others 2004 (4) SA 578 (C) our Courts had to come to a determination pertaining to whether the aforesaid exception also entitled the attachment, and according securement, of future maintenance benefits.
The court held at para 15 that:
“the maintenance act does not create a closed list of mechanisms available in law to assist children who have claims of maintenance and their specific situations are not expressly set out in the Act.
Section 2(2) of the Act provides that it may not be interpreted so as to derogate from the common law duty of support relating to the liability of persons to maintain other persons. In this instance, it is clear that the applicant’s case may not fall flat due to the fact that the first respondent is not concurrently in arrears.”
The court concluded at para 24 that;
“the attachment of pension fund benefits in respect of future maintenance claims in casu is a direct and effective means of ensuring that the rights of the child and the dignity of women are upheld. There is no reason why, in this instance, the pension fund should not be directed to withhold the withdrawal benefit in order to secure the future maintenance claims of the minor child”.
As a result, it is clear, in the instance of this exception, that both arrears and future maintenance (without arrears) can be claimed from a pension fund or retirement benefit.
2. Pension benefits stemming from divorce.
The Divorce Act confirms that a member’s pension interest in a Pension Fund, is regarded as a part of the member’s estate and/or assets.
For this purpose, pension funds may be taken into account when calculating the value of an estate, and may be claimed from as a result.
3. Amounts due to an employer.
The Pension Funds Act creates two exceptions here – employers may claim damages as a result of an employee’s conduct against the employee’s benefit in a pension fund, and further, amounts owing to an employer for housing loans, may also be claimed.
Limitations are, however, placed thereupon, to include the requirement that an order of Court is required and/or agreement to such deduction.
Our Court’s have further played an integral part in placing further protections thereupon, through confirming that an employer must have suffered an actual loss, as a result of dishonestly, fraud, theft, or misconduct (as is confirmed by the case of Rowan v Standard bank staff retirement fund and another (1)  2 BPLR 1638 (PFA)).
Further, and in protecting employee rights, our Court’s have confirmed that acts of negligence do not entitle a deduction from a pension fund.
There remain incidents of abuse and/or attempted abuse of the protections afforded in terms of the aforesaid, which include unfounded claims to solely delay the payment of funds by a pension fund.
Be the aforesaid as it may, our legislation and Court’s have ensured that such funds are protected from claims in a near absolute manner.
The aforesaid is not exhaustive. For more information or assistance, feel free to contact our office.
Written by Keegan Elliott (Attorney)
Research and input by Musa Matavindlela (Candidate Attorney)