Transnet Retirement Fund is a defined contribution fund. Transnet has two other pension funds, which are both defined benefit, Transport Pension Fund and Transnet Second Defined Benefit Fund.
The fund will be transferred from the former South African Transport Services to Transnet Ltd. The fund will actuarially determine to have a shortfall of 17.18 billion ZAR.
IF YOU ARE A MEMBER OF THE TRANSNET SECOND DEFINED BENEFIT FUND (TSDBF) OR THE TRANSPORT PENSION FUND (TPF) (both will be collectively referred to as the “FUNDS”), PLEASE READ THIS NOTICE AS THE IMPLEMENTATION OF THE SETTLEMENT AFFECTS YOU.
THE MEMBERS OF THE FUNDS INCLUDE:
• EVERYONE WHO RECEIVES A PENSION FROM ONE OF THE FUNDS
• EVERYONE WHO IS AN ACTIVE MEMBER OF THE TPF (EACH EMPLOYEE OF TRANSNET SOC LIMITED, SOUTH AFRICAN
AIRWAYS SOC LIMITED (“SAA”) OR THE PASSENGER RAIL AGENCY OF SOUTH AFRICA (“PRASA”) WHO CONTRIBUTES TO
THE TPF).
Access Transnet Pension Fund Act: Pension Fund Rules here
If you are a person with an interest in the proposed settlement (an “Interested Party”), then you should also read this notice. Geyser & Coetzee Attorneys is the Class Legal Representative of the members of the TSDBF and the TPF (including the PRASA sub-fund of the TPF and the SAA sub-fund of the TPF) in the Class Action Litigation against those two Funds and Transnet SOC Ltd (Transnet).
The Class Action was initiated for claims arising from:
• An allegation that a representative of Transnet’s predecessor and the predecessors of the Funds made a promise to the members of
the Funds in 1989. The alleged promise was that pensions would increase each year by a rate of at least 70% of inflation;
• An allegation that Transnet took over its predecessors’ obligation to pay an amount into the old pension funds (these are the funds
that were ultimately replaced by the Funds) that were necessary to maintain the old pension funds in a sound financial position; and
• An alleged unlawful donation made by one of the new pension funds to Transnet.
The Class Action Litigation was certified (authorised) by the High Court on 31 July 2014 (Certification Date). Pensioners and other
members of the TSDBF and the TPF are members of the Class. No current members of the Funds elected to opt out of the Class
Action Litigation.
The Class Legal Representative has negotiated and signed a settlement agreement with the Funds and Transnet. The Class
Representatives, Mr JPH Pretorius and Mr MD Kwapa, have also signed the settlement agreement. The parties to the settlement
agreement have applied to the High Court for a court order that the settlement agreement should be binding on the parties to the
Class Action Litigation, including all of the members of the Class.
The relevant terms of the settlement agreement are summarised as follows:
Conditions
The settlement agreement must be made an order of the High Court.
The Minister of Public Enterprises and the Minister of Finance have to approve rule amendments in respect of the TSDBF and the
Transnet Sub-Fund of the TPF (TSF) to allow the pension increases mentioned in the settlement agreement to be implemented.
The TSDBF and TSF must adopt pension increase policies that allow the pension increases mentioned in the settlement agreement to
be implemented.
The PRASA sub-fund of the TPF and the SAA sub-fund of the TPF must obtain necessary approvals for the benefit enhancements
proposed in the settlement agreement relating to those two sub-funds. Certain of these Conditions might be wholly or partly fulfilled as at the date of this Notice.
Lump sum payments
The parties agreed that within two months of the settlement agreement being signed by them, even if all the conditions above were
not yet met, each Pensioner would be paid an amount of R10 000.00 (ten thousand Rand). That amount was paid in December 2019.
The exception is SAA Pensioners, who will be paid after the company approvals required for the payment have been given.
Approximately one year later (around December 2020), each Pensioner will be paid a second amount of R10 000.00 (ten
thousand Rand).
Approximately one year later (around December 2021), each Pensioner will be paid a third amount of R10 000.00 (ten
thousand Rand). Each lump sum payment must be made by the relevant fund less such tax as the relevant fund is obliged to deduct or withhold in respect of each Pensioner.
The Funds retain discretion to grant bonuses in addition to these amounts subject to their rules and policies if that is affordable.
If a person who was a Pensioner has passed away, or passes away between the Certification Date and the date on which any lump
sum payment becomes due, then one of two things will happen, depending on the Pensioner’s circumstances:
• If the late Pensioner leaves any dependents whom the relevant Fund’s rules recognise as a surviving spouse pensioner or as a child
pensioner, then each of those ‘new’ pensioners will become entitled to the benefits set out in the settlement agreement, from the
Pensioner’s date of passing going forward, including where applicable one or more pension increases and/or one or more special
lump sum awards, and the deceased estate will not receive the lump sum(s).
• If the late Pensioner leaves no dependants who qualify for pensions from one of the Funds or sub-funds themselves, then the late
Pensioner’s estate will not have a claim against the TSDBF or the TPF or any sub-fund of the TPF or Transnet under the settlement
agreement or otherwise.
In future, after the 3 lump sum payments have been made, the board of trustees of each Fund will have the power to grant lump sum
payments as and when they consider it to be affordable, in such amounts as they consider to be affordable.
Pension enhancements
TSDBF and TPF shall continue to grant a minimum pension increase of 2% each year, at the usual time.
Pensioners will receive different pension increases depending on whether that pensioner is a member of (i) the TSDBF, the TSF or the
PRASA sub-fund of the TPF; or (ii) the SAA sub-fund of the TPF.
These special pension increases will be granted in addition to the minimum pension increase of 2% granted each year. Special increases for TSDBF, TSF and PRASA sub-fund pensioners:
Within two months of all the Conditions being met the funds will grant a special, across-the-board pension increase of
11% (eleven percent).
Approximately one year later, the funds will grant a second across-the-board pension increase of 7% (seven percent).
Approximately one year after the 7% increase, the funds will grant a third across-the-board pension increase of 4% (four percent).
Note that the PRASA sub-fund will need to amend its rules in order to be able to grant and pay the special increases to its Pensioners,
and therefore the special increases to be granted by the PRASA sub-fund will not take effect unless and until such time as the relevant employer and Ministerial approval in respect of such rule amendments has been obtained by the fund.
Special increases for TSDBF, TSF and PRASA sub-fund pensioners:
Within two months of all the Conditions being met the Funds will grant a special, across-the-board pension increase of
11% (eleven percent).
Approximately one year later, the funds will grant a second across-the-board pension increase of 7% (seven percent).
Approximately one year after the 7% increase, the funds will grant a third across-the-board pension increase of 4% (four percent).
Note that the PRASA sub-fund will need to amend its rules in order to be able to grant and pay the special increases to its Pensioners,
and therefore the special increases to be granted by the PRASA sub-fund will not take effect unless and until such time as the
relevant employer and Ministerial approval in respect of such rule amendments has been obtained by the fund.
Special increases for SAA sub-fund pensioners
Within two months of all the Conditions being met the SAA sub-fund of the TPF will grant a special pension increase to each of its
Pensioners to an amount determined by its valuator as the pension to which that Pensioner would have been entitled on the date
the increase takes effect had that Pensioner received an annual pension increase, since the pension was first paid, equal to 70% of
inflation (year-on-year changes in CPI).