WATCH | Mabuza moved millions from pension fund to living annuity after retiring – Alexforbes

Soon after retiring, former deputy president David Mabuza moved his millions from the Political Office Bearers Pension Fund to a living annuity, which states only beneficiaries nominated by him, in this case his wife, will get all R44.7m.

However, on finding out Nonhlanhla Mnisi was the only beneficiary, Mabuza’s daughter Tamara Silinda and her mother Emunah approached the court to halt the distribution of the money, claiming they are also beneficiaries.

Emunah said she was also Mabuza’s widow as they were married under customary law in 1999, and while they were separated at the time of his death, they were never divorced.

On Tuesday, Tamara successfully blocked the distribution of her father’s R44.7m pension fund through an urgent court application.

Alexforbes, however, said a living annuity is not a retirement fund and is not governed by the Pension Funds Act, which Tamara’s lawyer had relied on in his argument.

Doctor Sibuyi, Tamara’s lawyer, had said in his argument the nomination form only includes a person’s wishes, which is a guide. “In section 37 [of the Pension Funds Act], it takes consideration of the constitution when it comes to the issue of not leaving dependents of the deceased going to the streets,” he said.

“The law says when the deceased dies, it doesn’t mean the lives of the dependents come to a standstill. Hence the court has the right to protect the constitution.”

Consi Kalamaras, Alexforbes senior manager for public and media relations, said while retirement fund death benefits are distributed in accordance with section 37C at the discretion of fund trustees to identified dependents and nominees, this does not apply to a living annuity.

“On retiring in early 2023, the late Mr DD Mabuza elected not to retain his pension benefit in the Political Office Bearers Pension Fund. Instead, in terms of the fund rules, he chose to transfer the full value of his pension to purchase a living annuity from a registered insurer, specifically a living annuity product from Alexforbes,” she said.

“A living annuity is an insurance product, regulated by the Long-Term Insurance Act and the Income Tax Act, where the policyholder’s nominated beneficiaries receive the remaining capital portion of the investment upon death. In law, the insurer must pay the nominated beneficiaries and there is no discretion to depart from this. Any departure would have significant legal consequences.

“Retirement funds [pension, provident, retirement annuities and preservation funds] fall under section 37C, requiring trustees to consider the relationships of the deceased, underpinned by the principles of fairness, to determine legal and factual dependency for the allocation of benefits. This legally required process may delay distribution and may not align with the member’s stated wishes.”

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