Transnet pension fund rules being examined: Radebe

The board of trustees of the Transnet Second Defined Benefit Fund were in the process of amending the rules of the fund to make provision for the granting of ad hoc increases in excess of 2%, South African Public Enterprises Minister Jeff Radebe said on Friday.

Responding to Democratic Alliance MP JL Theron who noted that pensioners received increases of only 2% and asked whether the minister intended taking “any steps to ensure that these pensions receive a greater increase”, the minister said that in terms of the current rules of the fund, an increase “of only 2% may be granted”.

“I am aware that the Board of Trustees of the Fund is in the process of amending the rules of the fund to make provision for the granting of ad hoc increases in excess of 2%.”

In reply to an earlier question from Theron, Radebe said statutory increases of 2% were granted to all pensioners in the 2002/03 financial year.

He noted that the increases would be restricted to 2% until further “ad hoc” increases were affordable.

“No additional increase will be granted this year due to the financial status of the fund,” he said, noting that the lowest and highest amount paid out in pension or benefits in July this year was 112 rand a month up to R51 846 a month.

The minister said the last statutory evaluation of the fund dated March 31, 2002 indicated the funding level was 84,5%, but the current year’s “draft valuation deficit reflects a funding level of 72,1%”.

The deterioration in the funding level since inception is mainly due to poor investment returns in the past year owing to declining equity markets worldwide, the reduction in the long bond rates used in the valuation of the liabilities and partial reimbursement via M-Cell Trust for the cancellation of the T011 bonds.

He also said mortality assumptions strengthened in 2001. – I-Net Bridge

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