Eskom Pension and Provident Fund v Krugel and Another

Mr PJ Krugel was employed by Eskom and was a member of the Eskom Pension and Provident Fund. He resigned from Eskom on 31 January 1993 and elected to defer his pension benefit in terms of the Fund’s rules, thereby becoming a deferred pensioner. He and Ms Elizabeth Maria Krugel were divorced on 14 September 2001. Their settlement agreement, made an order of court, recorded that Ms Krugel was entitled to 25% of Mr Krugel’s ‘pension interest’ in the Eskom Pension Fund, payable when his pension benefits accrued, and that an endorsement would be registered against the Fund’s records. The Fund refused to endorse its records, contending that Mr Krugel no longer had a ‘pension interest’ as contemplated in ss 7(7) and 7(8) of the Divorce Act 70 of 1979 because he had resigned before the divorce. Ms Krugel lodged a complaint with the Pension Funds Adjudicator, who upheld her complaint and ordered the Fund to give effect to the divorce order. The Fund successfully appealed that determination to the Supreme Court of Appeal.

The appeal was upheld. The order of the South Gauteng High Court was set aside and replaced with an order setting aside the Pension Funds Adjudicator’s determination and dismissing the first respondent’s complaint. No order as to costs was made.

This case authoritatively clarifies that a deferred pension benefit does not constitute a ‘pension interest’ for purposes of ss 7(7) and 7(8) of the Divorce Act where the member spouse resigned before the divorce. It draws a clear distinction between ‘pension interest’ and an accrued pension benefit, limiting the circumstances in which divorce courts and pension funds may give effect to divorce orders. The judgment has important implications for divorce settlements involving deferred or preserved pension benefits and for the powers of pension funds under s 37D of the Pension Funds Act.