06 May 2026
This publication is intended for use by intermediaries.
Introduction: The settled legal position and ongoing valuation challenges
In the context of divorce proceedings, living annuities frequently give rise to uncertainty, particularly in relation to accrual claims. The legal position has been clarified by the Supreme Court of Appeal (SCA), but practical challenges remain, most notably in relation to valuation. While the relevant judgments are not new, they continue to be relied upon in practice and raise recurring questions for clients and intermediaries, especially in relation to valuation.
This article provides an overview of the current legal framework and highlights key considerations when dealing with clients undergoing divorce proceedings who hold living annuities with Glacier.
A quick recap: Living annuities are not ‘pension interest’
It is important to distinguish living annuities from ‘pension interest’ as defined in the Pension Funds Act No. 24 of 1956*:
“pension interest”, in relation to a court order granted under section 7(8)(a) of the Divorce Act, or a court order granted in respect of the division of of a marriage according to the tenets of a religion, means, in relation to a party who is a member of a fund, that member’s individual account or minimum individual reserve, as the case may be, determined in terms of the rules of that fund, on the date of the court order;
*This new definition was introduced in section 1 of the Pension Funds Act, effective 1 September 2024 and replaces the previous definition of ‘pension interest’ in Divorce Act No. 70 of 1979.
With effect from 1 September 2024, ‘pension interest’ refers to a fund member’s individual account or minimum individual reserve in a retirement fund, determined in terms of the rules of that fund at the date of the divorce order. Once a client has retired and those benefits have been used to purchase a living annuity from an insurer, the individual is no longer a member of the fund and no longer holds a ‘pension interest’ as defined. Instead, the client holds a contractual right to receive annuity income. Accordingly, a living annuity does not fall within the scope of ‘pension interest’ and cannot be divided or assigned to a non-member spouse in terms of a divorce order.
Legal Position: What Intermediaries need to know
The SCA has confirmed, most notably in ST v CT 2018 (5) SA 479 (SCA) and Montanari v Montanari (1086/2018) [2020] ZASCA 48, [Cv1] that a living annuity is fundamentally contractual in nature. The investment underlying the annuity are owned by the insurer, not the annuitant. The annuitant’s right is limited to receiving an income stream within the permitted drawdown range, and any residual value upon death is paid to nominated beneficiaries in terms of the policy.
This means that a living annuity does not form part of the client’s estate for purposes of accrual and cannot be treated in the same way as other investment . It also does not constitute ‘pension interest’ and is therefore not capable of division under a divorce order.
However, in Montanari, the SCA confirmed that, while the capital of the living annuity is excluded, the right to receive future annuity income may constitute an asset for purposes of the accrual calculation. This means that, although the annuity itself cannot be divided, it may still be relevant in determining the financial outcome between spouses.
In addition, annuity income remains relevant when assessing maintenance obligations, which should be considered as part of holistic financial planning during and after divorce.
Valuation: A key area of uncertainty
While the legal principles are relatively settled, the valuation of the right to future income remains uncertain. The courts have not prescribed a standard methodology, and no authoritative approach has been established.
For clients, this is often where complexity arises. The value of a future income stream depends on multiple variables, including drawdown elections, investment performance, life expectancy, and inflation assumptions. The absence of a standardised framework means that different actuarial approaches may produce materially different results, which can complicate settlement negotiations and client expectations.
Industry perspective: Actuarial Society of South Africa (ASSA)
In its public statement titled “The tricky business of valuing living annuities in a divorce” dated 14 October 2025, the Actuarial Society of South Africa (ASSA) acknowledged the importance of the Montanari judgment but cautioned that the valuation of living annuity income rights remains inherently challenging. ASSA emphasised that such valuation exercises are technically complex, open to differing actuarial approaches, and not governed by any single accepted industry standard.
ASSA further noted that a range of valuation methodologies is currently being placed before courts, often producing materially different outcomes. The statement also highlighted the potential for manipulation through changes in drawdown rates and stressed that independent actuarial expertise is essential to achieve fairness and consistency in divorce-related valuations. While ASSA suggested certain pragmatic approaches to assist practitioners, it made clear that these views do not constitute binding guidance or a prescribed valuation methodology.
For intermediaries, this reinforces the importance of managing the client’s expectations and avoiding expressing definitive views on valuation outcomes, instead focusing on facilitating informed decision-making supported by appropriate expertise.
Practical guidance for intermediaries
In practice, when supporting a client through a divorce, it is important to clearly explain that a living annuity cannot be divided or transferred to a non-member spouse. This remains one of the most common areas of misunderstanding.
At the same time, intermediaries should recognise that the annuity may still have indirect relevance, as the right to future income can be taken into account for accrual purposes and the income itself may influence maintenance considerations. Caution should be exercised when discussions turn to valuation. This is a specialised area that falls outside the scope of financial advice and should be referred to independent experts. Intermediaries can, however, play a valuable role in coordinating information and ensuring that clients are properly informed of the implications for their broader financial position.
Glacier’s position
Glacier’s role remains limited and clearly defined. Living annuities administered by Glacier cannot be split, assigned, or used to facilitate payments to a non-annuitant spouse under a divorce order.
Glacier does not perform or provide valuations of living annuities for divorce or accrual purposes and does not express views on valuation methodologies or outcomes. Where valuation is required, it must be obtained independently by the relevant parties.
We will continue to provide factual product and contractual information to support intermediaries and their clients but will remain neutral on valuation matters.
Conclusion
The key takeaway is that, although living annuities are excluded from direct division on divorce, they are not entirely irrelevant in the accrual context. The right to future income may be taken into account, but how it is valued remains uncertain and dependent on expert evidence.
Intermediaries play an important role in guiding clients through these complexities and clarifying misconceptions. Where valuation is required, intermediaries should inform clients that independent actuarial or valuation expertise must be appointed. Glacier will continue to support this process by providing factual information while maintaining a neutral, non-advisory position on valuation.
