The R44.7 million Mabuza estate battle: when a financial decision changes everything

THE legal battle over late former Deputy President David Mabuza's R44.7 million pension has taken a dramatic turn, revealing how a single retirement decision can override decades of protective legislation designed to safeguard dependants. This case serves as a stark warning about the financial and legal complexities that can devastate families when estate planning is inadequate.

The court victory and the underlying crisis

On October 1, 2025, Judge Johannes Hendrickus Roelofse of the Mpumalanga High Court granted an urgent interdict halting distribution of Mabuza's R44.7 million to Nonhlanhla Patience Mnisi, who was named as sole beneficiary (TimesLive, October 1, 2025).

The application was brought by Mabuza's daughter, Tamara Silinda, who was excluded despite being one of her father's dependants. At the heart of this dispute are two women claiming spousal rights: Emunah Silinda, asserting a customary marriage since 1999, and Mnisi, who produced a marriage certificate the Silinda family alleges was issued after Mabuza's death in July 2025.

Critically, Silinda and her mother submitted a Department of Home Affairs document stating Mabuza was not married at the time of death. Emunah Silinda claims she married Mabuza under customary law in August 1999 and gave birth to Tamara in October 2000. Although separated at death, she maintains their marriage was never dissolved (SowetanLive, September 18, 2025).

Advocate Doctor Sibuyi presented compelling evidence that Mabuza intended to change his nominations. An Alexforbes email dated September 11, 2025 confirmed: "We had a recent discussion with David (DD Mabuza). He wanted to change the beneficiaries, and we did send him the paperwork. He mentioned he wanted to nominate his children."

Tragically, Mabuza died before completing the forms (TimesLive, October 1, 2025).

The game-changing revelation: living annuity vs pension fund

However, Alexforbes dropped a bombshell that fundamentally changes the legal landscape: upon retiring in early 2023, Mabuza transferred his entire pension from the Political Office Bearers Pension Fund to purchase a living annuity from Alexforbes - an insurance product, not a retirement fund (SowetanLive, October 1, 2025). This distinction is legally critical.

Consi Kalamaras, Alexforbes, senior manager for public and media relations, explained: "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."

The beneficiary may continue to receive an annuity (if they choose to) to avoid paying substantial taxes on the capital portion. This means Section 37C of the Pension Funds Act - which Tamara's lawyer relied upon in his argument - does not apply to Mabuza's living annuity. Unlike retirement funds where trustees have discretion to distribute benefits equitably among dependants regardless of nominations, living annuities are binding contracts where nominated beneficiaries must receive the funds subject to the prevailing tax rates. The protective framework designed to prevent dependants from destitution simply does not cover living annuities.

Understanding Section 37C and why it matters

Section 37C of the Pension Funds Act 24 of 1956 governs death benefit distributions from pension funds, provident funds, and retirement annuities. It recognises three categories: legal dependants (persons the deceased was legally liable to maintain), factual dependants (persons financially dependent on the deceased), and nominees (designated beneficiaries).

Crucially, trustees have discretionary power to distribute benefits equitably, meaning nominations are merely guidelines.

Advocate Sibuyi argued: "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. 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" (SowetanLive, October 1, 2025).

But this constitutional protection evaporates when funds are transferred to a living annuity.

Alexforbes stated: "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."

The irony is stark: the very feature that attracts many retirees to living annuities control over beneficiary nominations without trustee interference eliminates the safety net protecting vulnerable dependants.

The compounding failures

This case illustrates multiple catastrophic failures. First, the absence of marriage registration created ambiguity about marital status. The Recognition of Customary Marriages Act validates customary marriages even without full lobola payment, but registration with the Department of Home Affairs within three months provides crucial legal certainty.

Second, the apparent lack of a comprehensive will left dependants vulnerable. A properly drafted will would have explicitly provided for all dependants, working alongside other protective legislation.

Third, incomplete beneficiary nominations proved devastating. Despite Mabuza's expressed intention and received paperwork, his failure to complete updated forms means his wishes cannot be honoured.

Fourth, and most critically, the decision to transfer pension funds to a living annuity removed constitutional protections for dependants, leaving them entirely dependent on who was nominated and whether that nomination was valid.

The human cost

Tamara Silinda, a first-year medical student at the University of Cape Town, requested interim maintenance of R40 000 monthly for living expenses and R127 990 for tuition fees. Her father's sudden death resulted in loss of support for basic necessities, while her unemployed mother cannot meet these needs (SowetanLive, September 18, 2025). Mabuza's siblings, supporting Silinda's bid, celebrated the interdict as a step toward justice.

Critical lessons for South Africans

This case offers urgent lessons:

- Understand the implications of living annuities. While living annuities offer investment flexibility and control over beneficiaries, they eliminate Section 37C protections. If you have dependants who are not nominated beneficiaries, they have no legal recourse under a living annuity.

- Register customary marriages. A Department of Home Affairs certificate provides legal certainty that simplifies inheritance claims and protects spouses.

- Draft comprehensive wills. Explicitly name beneficiaries and provide for all dependants. A will ensures wishes are honoured and creates legal clarity.

- Complete and regularly update beneficiary nominations. File written nominations promptly and review them when circumstances change. For living annuities, nominations are binding - make absolutely certain they reflect your current wishes and include all dependants you want to protect.

- Seek professional advice before retirement decisions. The choice between keeping funds in a pension fund versus transferring to a living annuity has profound legal implications for your dependants' protection. Estate planning experts can help navigate these complexities.

The R44.7 million Mabuza case is not just about money - it's about how financial decisions made without full understanding of legal consequences can leave loved ones vulnerable. The transfer to a living annuity, possibly made for legitimate investment and taxation reasons, inadvertently removed constitutional protections that might have protected Tamara and other potential dependants.

As this case proceeds, it reminds us that estate planning requires understanding not just cultural traditions and wills, but the technical legal distinctions between financial products. The question facing every South African is whether they truly understand how their retirement decisions affect their loved ones' futures.

Sanjith Hannuman is the managing director of Avinash Consultants & Actuaries.

** The views expressed do not necessarily reflect the views of IOL or Independent Media. 

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