Old Mutual Life Assurance Company (SA) Limited and Another v Swemmer

The respondent and her former husband, Dr Swemmer, were married in community of property. Upon their divorce, the High Court granted a forfeiture order and further ordered that certain retirement annuity policies be paid directly by the life insurers (Old Mutual and Sanlam) to the respondent at the earliest date the benefits could be accessed. The retirement annuity policies were owned by registered pension funds, with Dr Swemmer as the member. After Dr Swemmer turned 55, the respondent demanded immediate payment of the annuity proceeds from the insurers. The insurers refused, contending that the divorce order conflicted with the Divorce Act 70 of 1979 and the Pension Funds Act 24 of 1956. The respondent successfully applied in the High Court to compel payment, and the insurers appealed to the Supreme Court of Appeal.

The appeal was upheld. The order of the High Court compelling the appellants to pay the proceeds of the retirement annuity policies to the respondent was set aside, and the respondent was not entitled to immediate payment of the annuity benefits.

This case is a leading authority on the treatment of pension interests on divorce in South African law. It clarifies that a pension interest is a notional asset only, that divorce courts may not order payment of unaccrued pension benefits, and that non-member spouses do not acquire ownership or control over pension fund membership or retirement annuity policies. The decision provides important guidance to divorce courts, pension funds, and practitioners on the limits of s 7(7) and s 7(8) of the Divorce Act.