Transnet sig­nals con­tempt of its former work­ers

Weekend Argus (Saturday Edition) - - GOODDRINKING -

The ques­tion I so re­peat­edly ask is why re­tire­ment fund sav­ings seem to be such an easy tar­get for ev­ery­one; and to make it worse, pen­sion­ers them­selves are also gen­er­ally seen as soft tar­gets.

And it is not only the un­scrupu­lous who eye the tril­lions of rands in the re­tire­ment sec­tor – too many in the for­mal fi­nan­cial ser­vices in­dus­try, em­ploy­ers, trade unions and even govern­ment in­sti­tu­tions be­have badly.

Last week, Transnet and two of its funds tod­dled off to Par­lia­ment with a “so­lu­tion” for its funds, par­tic­u­larly the no­to­ri­ous Transnet Sec­ond De­fined Ben­e­fit Fund (TSDBF), where pen­sion­ers have been lim­ited to in­creases of two per­cent a year al­most since Novem­ber 2000, with a few once-off bonuses. This has ef­fec­tively im­pov­er­ished them, as the in­creases were way be­low the in­fla­tion rate.

In 2000, the then Transnet Pen­sion Fund was split into three parts. The ex­ist­ing con­tribut­ing mem­bers were given the choice of stay­ing in an ex­ist­ing de­fined ben­e­fit fund, the Transnet Trans­port Pen­sion Fund (TTPF), or mov­ing to a new de­fined con­tri­bu­tion fund, while 101 635 pen­sion­ers were hived off into the TSDBF. There are now 78 000 sur­viv­ing mem­bers.

At the time the TSDBF was es­tab­lished it sup­pos­edly had a sur­plus of al­most R2 bil­lion. How­ever, there were some rather strange in­vest­ment de­ci­sions, which left the fund in a frag­ile po­si­tion.

NOT SUB­JECT TO THE ACT

Transnet con­trols the boards of trustees of all three funds. As statu­tory funds they are not sub­ject to the re­quire­ments of the Pen­sion Funds Act, in­clud­ing be­ing sub­ject to the Pen­sion Funds Ad­ju­di­ca­tor or the re­quire­ment that 50 per­cent of board mem­bers be elected by trustees.

The two-per­cent in­crease was ne­go­ti­ated by re­tired se­nior ex­ec­u­tives of the TSDBF, but they main­tained it was a min­i­mum. Transnet and its ap­pointed board of trustees claimed the two per­cent was a fixed max­i­mum amount.

The main rea­son, it seems, was that the fund could not af­ford to pay any more be­cause of the ques­tion­able in­vest­ment de­ci­sions that had been made, and Transnet was not pre­pared, as the guar­an­tor of last re­sort, to make up any short­falls that would oc­cur if pen­sion in­creases were more aligned to in­fla­tion.

As the anger of the pen­sion­ers grew and be­came more vo­cal and pub­lic, Transnet paid a few on­ce­off bonuses and im­proved min­i­mum pen­sions, but these have made no sig­nif­i­cant dif­fer­ence.

The anger grew to such an ex­tent that the is­sue was raised in Par­lia­ment.

Transnet ex­ec­u­tives and the chair­man of the boards of trustees, Peter Moyo, pre­vi­ously an Old Mu­tual se­nior ex­ec­u­tive and former chief ex­ec­u­tive of Alexan­der Forbes, ap­peared be­fore Par­lia­ment’s Port­fo­lio Com­mit­tee on Pub­lic Enterprises.

They told the com­mit­tee about fur­ther ef­forts they are now mak­ing to im­prove the lot of the pen­sion­ers. The fund is now ap­par­ently in sur­plus, but it is no thanks to Transnet, which has not put its hand in its pocket to en­sure its former em­ploy­ees are able to meet the with­er­ing ef­fects of in­fla­tion. The pen­sion­ers will, in to­tal, re­ceive:

A once- off bonus equal to five months’ pen­sion. The TSDBF has al­ready paid a bonus equal to two months’ pen­sion, will hope­fully pay a fur­ther one month shortly, and Moyo hopes the fi­nal two months’ bonus will be paid by year-end. While the once-off five­month bonus adds al­most 42 per­cent to their pen­sions this year, it has no ef­fect on fu­ture years. The amount is not added to their pen­sions for next year or the next, so they are ex­cluded from any per­cent­age an­nual in­creases.

The TTPF pen­sion­ers will re­ceive a five-months’ bonus as well this year. This is the first time they have been granted a bonus.

An in­crease of be­tween 63 and 68 per­cent of the in­fla­tion rate on their next an­niver­sary date (af­ter the in­crease has been ap­proved) for both TTPF and TSDBF pen­sion­ers. Moyo says the two de­fined ben­e­fit funds want to tar­get in­creases of 75 per­cent of in­fla­tion in the medium to long term – this is more in line with pri­vate sec­tor de­fined ben­e­fit funds.

But even pen­sion in­creases of 75 per­cent of in­fla­tion are no great shakes. And av­er­age in­fla­tion for pen­sion­ers is much higher than for all cit­i­zens, with health costs be­ing a ma­jor con­trib­u­tor.

MED­I­CAL SCHEME ‘UN­DER SCRUTINY’

There is still the mat­ter of the Transnet med­i­cal aid scheme, where Transnet has been try­ing to duck out of its re­spon­si­bil­i­ties to pen­sion­ers.

Transnet’s act­ing chief fi­nan­cial of­fi­cer, Anoj Singh, says that the med­i­cal scheme is still un­der scrutiny.

He does not be­lieve the treat­ment handed down to the mem­bers of the TSDBF is im­pact­ing on the morale of cur­rent em­ploy­ees.

Well, maybe not, be­cause I pre­sume the vast ma­jor­ity of Transnet staff are on the de­fined con­tri­bu­tion fund, which means they will not be look­ing to Transnet as the fi­nal guar­an­tor of their pen­sions when they re­tire.

As with all de­fined con­tri­bu­tion funds, Transnet does not guar­an­tee the pen­sions of de­fined con­tri­bu­tion fund mem­bers – it only guar­an­tees that it will pay con­tri­bu­tions for mem­bers who are Transnet em­ploy­ees.

Transnet’s treat­ment of pen­sion­ers has been ap­palling. No credit goes to Transnet for the lat­est bonuses and pro­posed pen­sion in­creases – the money has come from in­vest­ment sur­pluses in the two funds, which have been built up by not giv­ing de­cent in­creases to fund mem­bers in the past and from in­vest­ment re­turns. In other words, it is no Christ­mas present from Transnet.

Transnet should, in fact, dig into its pock­ets and bring all the pen­sion­ers into line with at least 75 per­cent of in­fla­tion for each year that they have been on pen­sion – any­thing less is to treat former em­ploy­ees with con­tempt and is an abuse of the aged.

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