Report of the
Portfolio Committee on Public Enterprises on the Funding Solution for the
Transnet Second Defined Benefit Fund and the Transport Pension Fund, dated 2
November 2010
The Portfolio Committee on Public Enterprises received a
petition from the Pensioners of Transnet Second Defined Benefit Fund (TSDBF)
and the Transport Pension Fund (TPF). The plea of the pensioners was informed
by the deteriorating economic conditions and challenges that they faced as a
result of the low pensions they continued to receive. They received an annual
increase of 2% on their pensions for 2 decades as per rule Rule 24 (Rule as a Schedule) of the Transnet Pension
Fund Act (Act 62 of 1990) as amended in 1991 (52 of 1991); amended in 2000 (41
of 2000) and amended in 2007 (6 of 2007).
2. Background
Prior to 1990 Transnet had the
Railways and harbours pension Fund for Black employees and the Railways and
Harbours Superannuation Fund for white employees. In 1990 these two funds were
merged into the Transnet Pension Fund which was established under the Transnet
Pension Fund Act of 1990 (Act 62 of 1990). Prior to the merger the two pension
funds were controlled by the state and had an actuarial deficit of R17.1
billion. The fund has 79 467 members and the
average pension received by the members is R2 833 per month, and 40% of the pensioners received less that the State’s social pension of R940,00
per month (as in 2008).
3. Investigation
by the Committee
Having considered the petition of the
Pensioners, the Committee invited the affected stakeholders to brief the
Committee and subsequently took a resolution to investigate a funding solution
for the Transnet Second Defined Benefit Fund and the Transport Pension
Fund. The Committee established a task
team that comprised of Hon G Borman (ANC) (Convener), Hon L Gololo (ANC), Hon G
Koornhof (ANC), Hon S Van Dyk (DA), representatives of Transnet, Department of
Public Enterprises and National Treasury.
The task team met several times with
Transnet, National Treasury and the Department of Public Enterprises and
consulted with parties, study groups and clusters. Bearing in mind the injustices of the past a
funding solution needed to be affordable, fair and one that did not jeopardise
the future of the pension funds. The funding solution was aimed at addressing
the following objectives:
a) Ex gratia payment to compensate pensioners for the low
amounts paid out in the past;
b) Increasing
the base pension of the pensioners; and
c) An increase
policy to be applied going forward.
4.
Recommendations
The task team of the Committee tabled a report with
recommendations to the Portfolio Committee on 2 November 2010. The Committee
deliberated on the report and adopted the following recommendations:
Transnet and National Treasury
should make a cash
injection of R1.963 billion into the Funds which will be a funding solution for
TSDBF and TPF:
a)
An ex gratia payment of 5 months’ pension;
b)
A base upliftment of 3.21% and
c)
A 75% of CPI annual increase going forward on the 3.21% uplifted base
5.
Conclusion
Both Transnet and National Treasury participated in the
process that led to the recommendations, and the figures above were derived
from presentations on both TSDBF and TPF combined. They agreed that the funding
solution was affordable.
Report
to be considered