The division of living annuities upon divorce : a call for reform

Abstract

Whilst it is not uncommon for things to get unpleasant between two parties when divorce is looming, that does not warrant behaviour that intentionally prejudices another spouse and robs them off that which they are legally entitled to. In recent times, there has been a trend of member spouses purchasing living annuities with pension benefits during (or in the time leading up to) divorce proceedings. This dissertation addresses this trend from a legal perspective looking at the law regulating living annuities in South Africa as well as delving into the important concepts of pension benefits and pension interests in relation to living annuities. The law regulating living annuities in South Africa has been unclear and the legislature and courts have failed to adequately appreciate and resolve the prejudice caused by member spouses to non-member spouses when purchasing living annuities during (or prior to) divorce proceedings. It is of utmost importance that, whenever the court is faced with an issue involving married parties, it ought to give due regard to matrimonial property principles and seek aid relying on these principles. The Divorce Act 70 of 1979 also plays an important role when dealing with the issue at hand. Sections 7(7) and 7(8) of the Divorce Act have changed the narrative in respect of the question of whether pension interest is an asset in that, according to section 7(7), pension interest is deemed to be an asset in the estate of the member spouse and section 7(8) empowers the court to order pension funds to pay out portions of their member spouses’ pension interests to non-member spouses. Although the Divorce Act has to a certain extent addressed issues pertaining to division of pension benefits at divorce, the problem of living annuities remains and law reform in this area is necessary.