We marry believing it’s forever, but nearly half of all divorces take place within the first decade of saying “I do”. When a marriage ends, many couples will spend months agonising over custody of the children and the family pets; property, investments, and the lifestyle they would like to salvage. Their retirement savings barely get a mention.
That’s a costly oversight, considering what is at stake, because retirement savings are usually a couple’s second-largest asset.
StatsSA’s latest reporting cycle shows there were 24,202 divorces in 2024, which is 8.9% more than the previous year. Marriage rates also dropped by 2.6% during that time, meaning fewer people are tying the knot, while still well below the 1999 historic divorce rate of 37,098.
While divorce forces an immediate financial reset, few couples consider what it does to their retirement security in the years that follow.
The impact on their future income is far bigger than most people realise.
Your workplace pension is only part of the picture. Most South Africans build their retirement over several products: an employer fund, a private retirement annuity (RA), preservation funds holding savings from previous jobs, a tax-free savings account, unit trusts and other investments like property. And if they’re already retired, they might be drawing an income from a living annuity.
Every one of these counts as a marriage asset, so they all need to be named, valued and accounted for during a settlement.
Under section 7(7) of the Divorce Act, retirement savings count as part of the marital estate. You have a legal right to a share of your spouse’s pension interest. You don’t have to wait for them to retire to claim it.
One catch most people miss: whether you can claim at all depends on how you married. Married in community of property, or out of community with the accrual system? Your spouse’s retirement savings are on the table, and yours are on theirs. Married out of community without accrual? They usually aren’t.
A 2007 amendment to the Pension Funds Act introduced the “clean break” principle, which took effect in November 2008. It lets the fund pay your portion out directly once the divorce is finalised, so you no longer wait for your ex to resign or retire.
The catch? Your court order has to name the specific fund, or identify it clearly enough that there’s no doubt which one it is. Naming the administrator isn’t enough, because a single administrator can offer dozens of separate funds. A claim can also only be made while your spouse is still a member, not after they’ve already resigned and cashed out.
The September 2024 introduction by National Treasury in September 2024 of the two-pot retirement system complicates matters. Court-ordered divisions now slice proportionally across savings, retirement, and vested pots. On paper, the law provides protection because a member cannot make an emergency savings pot withdrawal during proceedings without their spouse’s written consent.
This protection isn’t automatic. A fund will only trigger the freeze once it receives formal, written proof that a divorce has been officially instituted. If a couple’s lawyer operates with an “old school” mindset – ie. waiting until final settlement negotiations to contact the fund manager – the member spouse could potentially log onto an app and drain their cash. That delay leaves a dangerous window open.
A practical example
Take, for example, “Thandi”, who has retired at the age of 65 with R9 million in retirement savings. At the age of 35, she started contributing R5,000 a month to her RA, which was projected to be R11.3 million by retirement. But when she was 42, during her divorce negotiations, Thandi forfeited half of her RA to her ex-husband, then “just” R193,000.
Despite monthly contributions continuing uninterrupted after the divorce, she has a R2.3 million shortfall at retirement.
Can you claw it back? Partly. Higher contributions or additional voluntary contributions after a divorce will narrow the gap, and a tax-free savings account adds growth you’ll never pay tax on. But the same compounding that punished the early withdrawal now works against the catch-up: money added in your fifties has years to grow, not decades. Topping up softens the blow, but it doesn’t erase it. The cheaper fix is protecting the pot in the settlement in the first place.
The shortfall isn’t money the divorce “took” upfront; it is the ghost of the exponential growth that surrendered cash would have generated over the next 23 years.
Compound growth does most of its work in the years just before retirement. A pension typically earns more in the decade leading to 65 than in the two decades before that, because the pot is already so large. If you withdraw money in your forties, the most productive stretch of the entire run compounds on a smaller pot. The shortfall only becomes obvious at retirement itself, by which time the curve should have been at its steepest.
A bird in hand?
Most couples would fight over a house because it’s tangible, but because a pension is abstract, are unlikely to consider it an asset in the medium turn. That thinking plays out badly during settlement negotiations.
Many insist on keeping the home, then take their pension interest as cash instead of transferring it into their own retirement annuity, preservation, pension or provident fund. Both do long-term damage. Property is illiquid, taxed on sale, expensive to maintain, and its value doesn’t compound.
Cash out instead of transferring, and the payout is taxed on the SARS withdrawal table. The first R27,500 is tax-free, but above that the rate climbs to a maximum of 36%, depending on the size of the award and any retirement withdrawals you’ve made before. Once it’s taxed, that money can’t go back in. So the compounding clock resets.
Since September 2024 part of the pot, the retirement component, can’t be taken as cash anyway. It must move to another retirement fund, leaving savers with the choice to reinvest the remaining balance or lose a portion to taxation.
The better option in most cases is a direct fund-to-fund transfer of the pension interest to the non-member spouse’s own preservation fund. This transfer is tax-free at the time it is made. The compound clock keeps running on the full amount. The non-member spouse can access the funds on a future qualifying event – resignation, retrenchment, or retirement – with the same tax treatment that would have applied to the original member. Ask your financial adviser to model the rand difference between a cash payout and a fund transfer before you negotiate.
A woman’s retirement burden
The 10X Retirement Reality Report found that 49% of South African women have no retirement plan, against 43% of men. Worse, 46% believe they will never have enough saved to retire at all. The structural reasons are well documented. South African women earn around 76 cents for every rand men earn in South Africa, says UN Women. Statistics South Africa’s Quarterly Labour Force Survey for the second quarter of 2025says women’s labour-force participation is 54.9% against 65.6% for men, with only 6.8% of employed women in managerial roles compared with 10.7% of men. Lower earnings produce lower contributions, year after year.
The financial fallout of a split affects women differently. Decades of taking on the bulk of domestic caregiving limits their earning potential. Since the introduction of the two-pot system, retirement industry tracking shows that women are more likely to make early savings pot withdrawals to cover immediate family expenses like school fees.
The ultimate mathematical trap of a late-stage divorce is brutal: a woman is often forced to split a retirement asset, draw down what’s left for survival, and then somehow make that smaller pot last a longer natural lifetime.
Divorce does not have to put your retirement at risk, but it will, if you don’t broach it during divorce negotiations.
