Members are aware of the “clean break” principle that applies when a member of the GEPF is divorced and the divorce decree assigns a portion of the member’s pension interest to the former spouse.
Since inception of the “clean break’ principle, the amount paid out to the former spouse created a debt for the GEPF member in the Fund. The debt then attracted interest over the course of the member’s membership of the Fund. In 2017, however, the parties to the PSCBC agreed to change the application of the “clean break” principle from a debt approach to a pensionable service reduction approach (PSCBC Resolution 1 of 2017). The change has now been enacted and is expected to become operational on 1 August 2019, after implementation rules have been gazetted.
The change means that where a pension interest is assigned to a former spouse of a member of the GEPF, the number of years of pensionable service of such member shall be reduced, in terms of a formula, to offset the amount assigned to the former spouse. If for example, a member’s pensionable service is, at the point of divorce, reduced by 10 years and upon exit from the Fund (retirement, resignation, ,medical boarding) he /she completed 30 years’ pensionable service, only 20 years will be taken into account in the calculation of the member’s pension.
Members of the GEPF currently still in service and in respect of whom the debt approach had been applied when they divorced, will, as a transitional measure, be given the choice to remain with the debt approach or to have the pensionable service reduction approach applied to them. A period of 12 months, expiring on 22 May 2020, is being set aside for this purpose. The GEPF will provide such members with the necessary information to enable them to make an informed choice.
Affected NAPTOSA members are advised not to let the opportunity pass to exercise their choice, because failure to do so will result in the pensionable service reduction approach being applied by default. Such members are further advised to obtain expert financial advice before exercising their choice.