Question:
Can anybody "touch" my retirement annuity at any point in time? Is it completely safeguarded against any creditors of whatever nature?
Answer:
Andre,
This is governed by S37 of the Pension Funds Act. As with most things in law, nothing is ever quite straight-forward as it could be and you should read through this section of the Act, to get a fuller appreciation of the underlying complexity.
In principle, the rule is a as follows:
Your RA savings are designed to provide with income retirement, and you therefore cannot access this money before retirement (earliest age 55), other than under exceptional circumstances (formal immigration, disability).
S37a of the Pension Funds Act (covering also retirement annuities) stipulates that a member’s benefits payable in terms of the rules of a fund (including an annuity purchased by the fund from an insurer for a member) cannot be reduced, transferred, ceded, pledged or hypothecated, subjected to any form of execution under a judgement or order of court of law, or taken into account in the determination of a judgement debtor’s financial position in terms of section 65 of the Magistrates’ Court Act, for an amount exceeding R3 000.
In other words, only R3 000 may be deducted from your retirement annuity in order to pay creditors. That is the rule regarding a debt judgment against you.
In terms of S37B, pension assets do not form part of an insolvent estate. In other words, the full amount of your Fund is protected from creditors in the event you go insolvent.
These provisions do not mean that your retirement annuity money is "untouchable". The Act allows certain deductions under S37A(3)(c) – which in turn refers to S37D – and S37A(3)(d), which relates to arrear contributions that may be recovered by the fund.
S37D permits, among others, deductions from the fund in respect of amounts due per the Income Tax Act, guarantees furnished by the fund on behalf the member in respect of a loan granted by another person [unlikely with an retirement annuity], amounts due and payable under the Divorce Act and the Maintenance Act, and damage claims by employers.
This is a particularly long and complicates section of the Act, and you should consult a lawyer or financial adviser to obtain the exact legal position for your particular circumstances.
