PFA rules Islamic marriages valid for divorce pension payouts

Muvhango Lukhaimane, the Pension Funds Adjudicator.

The Office of the Pension Funds Adjudicator has reiterated it will not discriminate against parties married in terms of Islamic law.

This was made abundantly clear by Muvhango Lukhaimane, the Pension Funds Adjudicator, ina determination in which she ordered Sanlam Staff Umbrella Pension Fund to reverse its earlier decision not to pay a complainant,Ms Z Paulse, a 50% share of the pension interest in a divorcesettlement.

Sanlam Staff Umbrella Pension Fund (first respondent) and its administrator,Sanlam Life
Insurance Limited (second respondent),submitted that the parties were not married in terms of the Marriage Act, 25 of 1961 (i.e. civil marriage), the Recognition of Customary Marriages Act, 120 of 1998 or the Civil Union Act, 17 of 2006, but in terms of the tenets of the Islamic religion.

They claimed the Divorce Act was not applicable to the dissolution of the saidmarriage as the latter had to be dissolved in terms of the tenets of the Islamic religion.

A decree of divorce as contemplated in terms of the Divorce Act was not possible since there was no marriage as contemplated in terms of the Divorce Act.

The marital bond between the complainant and Mr Paulse was dissolved on 20 February 2013 in terms of the tenets of the Islamic religion. The divorce and the settlement agreement between the parties were made an order of the Western Cape High Court in Cape Town on 25 February 2014.

The respondents submitted that in terms of section 7(8), only a court granting a decree of divorce can grant a section 7(8) order and argued that the court order at hand was granted following application proceedings.

The respondents agreed that in terms of the recently amended section 37D(a)(d)(i) of the Pension Funds Act, a marriage under Islamic law was recognised for the sake of payment of pension interest.

They contended that, however, if the intention was that it should be possible to obtain section 7(8) orders in respect of Islamic marriages, there was a shortcoming in the legislation insofar as the Financial Services General Laws Amendment Act, 2013 only amended section 37D(1)(d)(i) of the Act, while there were many provisions in the Act, the Income Tax Act, 58 of 1962 and the Divorce Act, which required amendment before orders following the dissolution of Islamic marriages may be treated in the same manner as the dissolution of civil and customary marriages.

The respondents said the above-mentioned shortcoming had been brought to the attention of the Deputy Registrar of Pension Funds at the meeting with the Institute of Retirement Fund’s (IRF) Legal and Technical Committee.

The IRF asked the Financial Services Board to assist in order to motivate to the Department of Justice for the amendment of the Divorce Act and the Act in order to allow divorce orders contemplated in Section 7(8) of the Act as well as the “clean break” as provided in the Act in respect of Islamic marriages.

It indicated that the IRF was in the process of making submissions and it was likely that legislative amendments would be made. However, there was no indication as to when such will be implemented.

The respondents said the parties could choose to wait for the legislative amendments and then resubmit the order to the first respondent and claim the payment of the share of the pension interest to the non-member spouse. However, there is no guarantee that such legislative amendments will apply retrospectively. Alternatively, the parties could elect to resolve the matter between themselves without the involvement of the first respondent.

The respondents also disagreed with a decision by the Office of the Pension Funds
Adjudicator in a similar 2012 matter of Tyron v Nedgroup Defined Contribution Pension and Provident Funds and Another.

In that determination, the Pension Funds Adjudicator ruled a spouse in an Islamic marriage was still entitled to pension interest allocated to her in terms of a divorce order and the complainant had every right to be considered as a spouse for the purposes of payment of pension interest.

In her determination, Ms Lukhaimane said that prior to 28 February 2014, parties who divorced after having married in terms of the Islamic religion confronted a challenge when a non-member spouse intended to claim pension interest held by a fund in respect of the member spouse.

More often, the resistance waged by the funds was based on the fact that such marriages were not recognised in terms of the Marriage Act of 1961 and, therefore, divorce orders issued pursuant to the dissolution of Islamic marriages did not constitute a divorce order as contemplated in terms of section 7(8)(a) of the Divorce Act, 70 of 1979 and section 37D(1) of the Act.

She said the issue of the non-recognition of Islamic marriages was brought to the scrutiny of the Constitutional Court in the matter of Daniels v Campbell NO and Others 2004 (5) SA 331 (CC)).

In this matter Sachs J observed that, the word “spouse” in its ordinary meaning included parties to a Muslim marriage.

Such a reading was not linguistically strained but corresponded to the way the word was generally understood and used. It was far more awkward from a linguistic point of view to exclude parties to a Muslim marriage from the word “spouse” than to include them.

Ms Lukhaimane said that presented with a situation wherein the fund refused to pay a pension interest to a non-member spouse on the grounds that parties had been married and divorced in terms of Islamic law, this Tribunal issued a determination in the matter of Tyron.

In this matter, the Tribunal held it was possible for spouses married and divorced in terms of Islamic law, to share in the other spouse’s pension interest upon divorce, thereby ordering that the member spouse’s retirement fund must make payment to the non-member spouse if the agreement reached between the parties regarding the division of pension interest stated as much and has been made an order of court.

In order to address the lacuna with respect to the payment of pension interest to parties divorced in terms of the Islamic law, legislative amendments were made in the Act to cater for Islamic marriages.

Ms Lukhaimane said while she welcomed the respondents’ concern about the need to make amendments to certain provisions of the Act and other relevant pieces of legislation in order to give full effect to the provisions of section 37D(1)(d)(i) of the Act, it was the Tribunal’s view that the intention of the legislature was to accord spouses married in terms of Islamic law equal treatment granted to parties married in terms of civil and customary marriages in so far as dealing with patrimonial assets following the dissolution of a marriage.

“Were this Tribunal to accede to the request of the respondents for the parties to wait until an amendment is made to the relevant pieces of legislation, it would be perpetuating a differentiation which cannot be justified in a democratic and multi-cultural society as ours.

“This Tribunal holds the view that it cannot be party to the perpetuation of injustice and discrimination against parties married and divorced in terms of Islamic tenets, where it is clear that the legislature intended them to be treated in a similar fashion as parties in civil and customary marriages, and where parties have reached an agreement regarding the payment of pension interest and made such an agreement an order of the court.”

Ms Lukhaimane noted the fact that the IRF would be making submissions to the FSB for legislative amendments to be effected as submitted by the second respondent.

“However, whilst that process takes care of itself, the first respondent must comply with the provisions of the Act and the divorce order and, thereafter, pay a share of the pension interest to the complainant as stipulated in the settlement agreement made an order of court.”

The first respondent was ordered to compute and pay the complainant her share of pension interestas provided in the divorce settlement agreement.