Government Employees Pension Fund v Naidoo

The respondents were married in community of property and later divorced on 7 May 2004 in the Durban High Court. The second respondent (Mr Naidoo) was employed by the KwaZulu-Natal Provincial Administration and a member of the Government Employees Pension Fund. He resigned from his post at Clairwood Hospital in February 2004, before the divorce, which caused his pension benefits to accrue to the joint estate. The divorce order purportedly granted Mrs Naidoo (the first respondent) a half share of Mr Naidoo's pension interest in terms of sections 7(7) and 7(8) of the Divorce Act 70 of 1979. However, this order was granted per incuriam as those provisions only apply to pension benefits that have not yet accrued. The pension benefit was the only asset in the joint estate. The fund refused to pay Mrs Naidoo's share, contending that section 21(1) of the Government Employees Pension Law 1996 prohibited such payment. Mrs Naidoo obtained a rule nisi directing the fund to pay her share, which the fund opposed. The High Court (Jappie J) confirmed the order, finding that Mrs Naidoo was entitled to her half share and that section 21(1) did not preclude payment.

• Whether section 21(1) of the Government Employees Pension Law 1996 precluded the pension fund from paying Mrs Naidoo her half share of the pension benefit that had accrued to the joint estate
• The proper interpretation of section 21(1) of the Government Employees Pension Law 1996, particularly the prohibition against benefits being 'liable to be attached or subjected to any form of execution under a judgment or order of a court of law'
• Whether a non-member spouse claiming her share of a pension benefit that had accrued to the joint estate constitutes a creditor seeking to attach or execute against the benefit
• The applicability of sections 7(7) and 7(8) of the Divorce Act 70 of 1979 when pension benefits have already accrued to the member spouse before divorce

The appeal was dismissed. The order of the court a quo (Jappie J) was confirmed, directing the Government Employees Pension Fund to pay Mrs Naidoo her half share of the pension benefit.

Section 21(1) of the Government Employees Pension Law 1996 does not preclude a pension fund from paying a non-member spouse her share of a pension benefit that accrued to the joint estate prior to divorce. The prohibition against benefits being 'liable to be attached or subjected to any form of execution under a judgment or order of a court of law' is directed at protecting the benefit from creditors of the member spouse. A non-member spouse claiming her proprietary interest in a pension benefit that accrued to the joint estate is not a creditor seeking to attach or execute against the benefit, but rather is claiming her undivided half share in an asset of the joint estate to which she became entitled upon divorce. Where a pension benefit accrues to a joint estate before divorce, the non-member spouse acquires an undivided half share in that benefit and is entitled to claim payment of that share upon divorce.

The Court observed that sections 7(7) and 7(8) of the Divorce Act 70 of 1979 are only applicable to pension benefits which have not yet accrued to the member spouse, envisaging an award to the non-member spouse of any part of the member spouse's 'interest' calculated as at the date of divorce but payable when the pension benefit accrues in the future. Once the pension benefit has accrued, these provisions are no longer applicable (citing De Kock v Jacobson 1999 (4) SA 346 (W) at 349F-G and Old Mutual Life Assurance Co (SA) Ltd v Swemmer 2004 (5) SA 373 (SCA) para 18). The Court also noted that Mr Naidoo could have no cause for complaint if the fund paid Mrs Naidoo her half share, as he was joined as a party, was aware of the relief sought against the fund, yet chose to settle the claim against him and ignore the relief claimed against the fund despite his interest in the latter.

This case is significant in South African matrimonial property and pension law for establishing that section 21(1) of the Government Employees Pension Law 1996, which protects pension benefits from creditors' claims and prohibits their cession or attachment, does not prevent a non-member spouse married in community of property from claiming her share of a pension benefit that accrued to the joint estate before divorce. The judgment clarifies the distinction between a creditor seeking to execute against a pension benefit and a spouse claiming her proprietary interest in an asset of the joint estate. It also confirms the limitation of sections 7(7) and 7(8) of the Divorce Act 70 of 1979 to situations where pension benefits have not yet accrued, reinforcing the principle in De Kock v Jacobson 1999 (4) SA 346 (W). The case provides important guidance on how pension funds should deal with claims by non-member spouses when benefits have accrued to a joint estate before divorce.