Abstract
AbstractThis article discusses the law regulating living annuities when spouses in South Africa are divorcing. It demonstrates that South African courts have interpreted the law to prejudice non-member spouses financially. It argues that courts have failed to consider matrimonial principles when determining whether living annuities are susceptible to being shared on divorce. It argues further that adequate consideration of matrimonial principles will render it impossible for retirement fund members to prejudice their spouses financially by purchasing living annuities without the consent of such spouses, particularly when married in community of property. Disregarding matrimonial law principles may lead to deprivation of property.
Highlights
The law regulating the sharing of pension interests in South Africa is not settled and there are outstanding issues that still need to be clarified.[1]
A number of issues have proved to be a source of concern arising out of the division of the retirement fund members’ pension interests due to divorce, one of which relates to retirement fund members purchasing living annuities with their accrued pension interests
This article discusses the potential prejudice that such transactions have, or may have, on persons who are married to these member spouses when retirement benefits became due before divorce and living annuities are purchased immediately thereafter
Summary
The law regulating the sharing of pension interests in South Africa is not settled and there are outstanding issues that still need to be clarified.[1]. There was some confusion regarding the status of the portion of the pension interests that courts can order retirement funds to pay to nonmember spouses.[23] In 2016, the Supreme Court of Appeal (hereafter “SCA”) in Ndaba v Ndaba clarified the law in this regard, and held that “[t]he language of s7(7)(a) is clear and unequivocal It vests in the joint estate the pension interest of the member spouse for the purposes of determining the patrimonial benefits, to which the parties are entitled as at the date of their divorce.”[24] This essentially means that non-member spouses who are married in community of property are entitled to their member spouses’ pension interests upon divorce.[25] Non-member spouses who are married out of community of property with the application of the accrual system will only be entitled to the portions of their member spouses’ pension interests if they demonstrate that at the time of the divorce the value of their estates is less than that of their member spouses.[26]. 32 T Bester “Comparing five annuity options offered at retirement in South Africa” (MCom thesis, Stellenbosch University 2016) at 41
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