Legal - Post Office Retirement Fund

27/08/2015 12:09

    Ngewu and Another V Post Office Retirement Fund and Others [2013] 1 BPLR 1 (CC)

GavinStansfield, Director, Employment, Cliffe Dekker Hofmeyr

In the decision of Ngewu and another v Post Office Retirement Fund and others [2013] 1 BPLR 1 (CC), the Constitutional Court had to decide when pension benefits accrue to divorced spouses. In this case, Mrs Ngewu (Applicant) was married to a Post Office employee who had been a member of the Post Office Retirement Fund. During the divorce proceedings, the court found that a 50% share pension interest should be paid to Mrs Ngewu. However, under the Rules of the Fund, Mrs Ngewu's portion of her ex-husband's pension interest would not accrue upon divorce but rather when Mr Ngewu terminated his membership in the Fund.

Mrs Ngewu therefore sought to change the Rules of the Fund so that her pension interest, and those of other ex-spouses in a similar position, accrues on the date of divorce.

All parties agreed that the Post Office Act, No 44 of 1958 was unconstitutional in so far as it did not provide for the payment of the pension interest at the time of divorce. The agreement between the parties stemmed from the payment of divorced spouses' pension interests in terms of the Pension Funds Act, No 24 of 1956 and the Government Employees Pension Law Amendment Act, No 21 of 1996 which states that the pension interest is payable at the time of divorce(known as the 'clean-break' principle) where in comparison the payment governed by the Post Office Act is only payable upon termination of membership by the member in the fund.

The Constitutional Court held that this differentiation violated the right of equality before the law and equal protection and benefit of the law. Consequently, the Constitutional Court declared s10 to 10E of the Post Office Act unconstitutional but ordered that the declaration of invalidity be suspended for eight months for the legislature to cure the defect. The defect was subsequently cured in terms of the Government Employees Pension Law Amendment Act.

It is important to note that as a result of the judgments in the present case as well as the Goverment Employees Pension Fund and the clean break principal.Wiese v Government Employees Pension Fund and Others (CCT111/11) 2012 (6) BCLR 599 (CC) case, the assigned portion of the pension interest would be deemed to have accrued on the date of the divorce order.

Accordingly, the non-member spouse is entitled to be paid the assigned amount directly to him/her or to have it transferred to an approved pension fund on
the date of divorce. This would invariably result in the member's interest diminishing significantly on the date of divorce.

In conclusion, it is important to note that all pension fund rules which are not in line with the above applicable judgments (with regard to the time of pension benefits accruing and the payment thereof to non-member spouses) may be declared invalid and unconstitutional.

Should you need assistance to claim your portion of your divorce pension benefit please contact Christel -