LAW CORNER

2018-06-06 06:01

CAN CREDITORS AND THIRD PARTIES CLAIM YOUR PENSION BENEFITS?

The Pension Funds Act protects citizens not only against creditors but also from themselves in that it makes certain acts or agreements in relation to pension benefits invalid.

Section 37 of the Pension Funds Act prevents pension benefits from being ceded, pledged or hypothecated, or being subjected to execution under a judgment or court order. Where a member attempts to cede, pledge or hypothecate a benefit, the fund may withhold or suspend payment.

The fund must pay directly to a member or beneficiary. The fund may also release the payment to a dependant, or to a trustee, for the benefit of a dependant.

Are there exceptions to this rule?

There are certain instances where the law allows the fund to make payment to third parties who are not beneficiaries.

THIS INCLUDES:

• Amounts due in respect of housing loans, granted by the fund/employer or for which the fund/employer agreed to stand surety

• Pension interests awarded to former spouses on divorce. The non-member spouse can elect to have the fund make payment to him/her directly or to his/her preservation fund

• Maintenance claims awarded against the member and the fund

• Damages due to an employer caused by a member’s misconduct

• Benefits may be paid to a third party if that member or beneficiary provides sufficient proof that he or she is not able to open a bank account and such payment must be regarded as being a payment to that beneficiary


DO THE BENEFITS FORM PART OF AN INSOLVENT ESTATE?

The fund also protects a beneficiaries in situations where the estate of a fund’s member is sequestrated. In such instances, the benefit shall not form part of the insolvent estate and shall not be attached by the trustee in the insolvent estate or appropriated by creditors.

Written By: Gundo Maduvhula (Candidate Attorney at J Leslie Smith & Company Inc.)

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