On Thursday, Old Mutual South Africa threw a spanner in the ongoing boycott with an explosive statement clarifying a claims saga involving Sebabatso Molefi.
Old Mutual clarifies Sebabatso Molefi claims saga
Following a turbulent week that saw the company’s stock value close at R1 196 on Monday, 11 March 2024, Old Mutual resurfaced with a statement clarifying the saga involving Sebabatso Molefi’s mother.
Molefi prompted a massive boycott when, in a series of X posts dating back to Tuesday, 5 March 2024, she blasted Old Mutual for contravening a court order compelling the insurance company to settle an outstanding claim with an undisclosed value.
What she failed to disclose, however, was that her issue was vastly unique to thousands of complaints that surfaced after her X post went viral.
In a statement released on Thursday, two days after a high-level meeting with Molefi’s representatives, Old Mutual set the record straight about the nature of the debacle.
Here is a breakdown of what the insurance company revealed:
At some point in the recent past, Molefi’s parents finalised their divorce, the nature of which remains unknown.
During their marriage, Molefi’s father had been contributing to a pension plan through Old Mutual. As part of their divorce settlement, it was agreed that the mother would receive a portion of her ex-husband’s pension assets.
This is a common scenario, as pension assets accrued during the marriage are often considered joint assets and can be divided upon divorce.
However, the timing of the divorce decree’s arrival at Old Mutual was problematic.
By the time Old Mutual was informed of the divorce and the decree regarding the pension assets, Molefi’s father had already retired.
At retirement, the ex-husband chose to take a portion of his pension in cash, with the remainder used to purchase an annuity, which is a series of future payments, as is standard practice under the Pension Funds Act.
The issue here is twofold:
- Pre-Retirement vs Post-Retirement: If Old Mutual had been informed of the divorce before the ex-husband’s retirement, Molefi’s mother could have received her share of the pension assets directly in a lump sum, though this would have been taxable if taken in cash. However, because the information came in post-retirement, the only option available under the law was for the ex-wife to receive a portion of Molefi’s father’s annuity income, changing the nature of her settlement.
- Legal and Tax Compliance: Old Mutual had to navigate the complex legal and tax requirements to ensure any settlement between the divorced couple complied with pension funds law and tax law. This included exploring different options for the ex-wife to receive her entitled portion without violating any regulations.
“We have investigated ways to solve the problem but require the co-operation of our customer and his family. We proposed two alternatives at a meeting with the non-member’s representatives on Tuesday, and followed up with detail of what the standard expected tax impacts of each option would be yesterday,” the insurance company explained.
Molefi’s daughter, who’s been at the forefront of the Old Mutual boycott, has yet to formally address the explosive statement.
Read Old Mutual’s full statement below.