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Johannesburg - Pensioners of the Transnet Second Defined Benefit Fund (TSDBF) have possibly won their long battle for better increases.
Transnet acting chief executive Chris Wells told Sake24 last week that in future pensioners might receive inflation-linked pension increases.
Wells said the fund was actuarially strong enough to afford an inflation-liked increase of 75% of the inflation rate. Transnet, he said, was unfortunately unable to add money to improve the increase.
The process is currently under review by Treasury and parliament.
Sake24 understands that the process has been presented to parliament and Treasury because the possibility exists that government could make more money available to the fund to boost the increases.
The TSDBF is one of the biggest pension funds in South Africa. It's a closed pension fund with more than 80 000 members, all of whom are former Transnet workers who retired before or in 1990.
The average amount that TSDBF pensioners receive is R2 833 a month. They have for some time been unhappy because their annual increases have been limited to 2% a year.
For years these pensioners have been insisting on receiving inflation-linked increases.
Wells said parliament would ultimately determine when the new increases would come into effect.
Part of the success achieved in managing the fund was thanks to shifting 80% to 85% of the funds’ assets out of the stock market in order to ensure the fund’s stability.
These assets are now largely invested in structured bond portfolios to safeguard pensioners’ future pensions.
More good news for pensioners is that the trustees of the TSDBF recently announced a bonus would be paid out in November 2010. The amount would be 8.5% of members’ annual pensions.
Wells said on September 30 the TSDBF’s surplus had amounted to R2.9bn.
Since 2002 pensioners’ increases had been limited to 2% a year because the pension fund’s assets could not afford more. At one stage the fund was up to 25% under-capitalised – in other words, its assets were insufficient to guarantee future pensions.
After Transnet intervened, some of the fund’s assets had been sold to strengthen it.
The TSDBF then capped the annual increases, and subsequently making annual bonus payments. But bonuses were not guaranteed and there was no certainty of their being paid every year.
Since August 2008 the TSDBF trustees have been considering giving the pensioners inflation-linked increases.
One of the pensioners, a Mr Von Bekker, who has been a heavyweight activist over the years, protesting the low increases, said the pensioners wanted to see the increases before they believed them.
Many of the pensioners, he said, were eating dog and cat food as that was all they could afford. They had become impoverished over the years and that was Transnet’s fault.
The fund had become impoverished through mismanagement, for which he blamed Transnet.
- Sake24
For business news in Afrikaans, go to Sake24.com.
