The amended section 37D of the Pension Funds Act which came into effect on 13 September 2007, stipulates that any amount granted to a non-member spouse, may be deducted from the member's pension benefit in terms of section 7(8) of the Divorce Act.

The intention of this amendment is to allow pension funds to deduct any amount due to a non-member spouse as a result of divorce on the date of the divorce order and no longer from the date the benefit accrues to the member as was the case prior to 13 September 2007.

With effect from 1 November 2008 a non-member spouse will be able to elect the amount to be paid directly to him/her or to be transferred to a pension fund on his/her behalf.

It is the duty of a non-member spouse to hand in the divorce order at the pension fund.  The pension fund must, within 45 days after the divorce order was submitted, request the non-member spouse to elect if the amount to be deducted must be paid directly to him/her, or transferred to a pension fund on his/her behalf.

The non-member spouse must make this election within 120 days.

The pension fund must pay or transfer the amount within 60 days after receiving notification by the non-member of his/her election.

Should the non-member spouse fail to make an election or to identify a pension fund to which the amount should be transferred within the 120 day period, the pension fund must pay out the amount directly to the non-member within 30 days after the 120 day period has expired.

In the event where a divorce order was granted on or after 13 September 2007 and was executed before 1 March 2009, the amount of the divorce order is included in the member's gross income and therefore taxed in the hands of the member.  The tax may be recovered from the non -member spouse unless the divorce order provides otherwise.

The amount received by a non-member spouse in terms of a divorce order granted on or after 13 September 2007 and executed on or after 1 March 2009, will be taxable in the hands of the non-member spouse.

In the case of an order of divorce being granted prior to 13 September 2007, the member will be taxed, irrespective of the stipulations applicable since 1 November 2008.