By Ashleigh Brown, journalist, Justmoney
Pension experts have cited the possibility of Transnet pensioners applying for a state pension as a source of income or falling back on other savings to tide them over while the court battle to instigate a class action rages on. “If a pension fund goes belly up, or fails, many pensioners only have that as their savings for retirement,” said Gavin Came, a the director at the Financial Intermediaries Association of Southern Africa (FIA).
“Normally a pension fund is a huge part of a retiree’s capital base, or income base, so it would be quite a setback for many, many pensioners. But if there was nothing, then they would be forced to look to other savings that they have accumulated over the years,” said Came.
Came added that another option would be for pensioners to apply for a state pension. However state pensions offer a low income. The maximum amount a pensioner can receive from the state is R1,350 a month. If the pensioner is over 75, then they will receive an extra R20 a month.
But Anton Swanepoel, legal advisor for Sanlam Employee Benefits believes that might not be a completely viable option: “If they get a very low pension from the Transnet fund, the state pension - or what is called the old age pension - might be an option. But the problem is to qualify you must take into account all your other income, your Transnet income and your assets as well. So it might be that they just fall short of the requirements.”
The South African Government Services’ website says people qualify for a state pension if they do not earn more than R49 200 per year or own assets worth more than R831 600 if they are single. They may also not have a combined income of more than R99 840 per year if they are married. Applicants and their spouses also don’t qualify if they have assets worth more than R1 663 200.
Fighting for the right to sue
Judgment is expected next week on the application by Johan Pretorius and Johan Kruger to launch a class action against freight logistics chain Transnet on behalf of the Transnet pensioners. If successful the class action will be the biggest in South African history to date.
Pretorius and Kruger want to launch the suit on behalf of Transnet's 62 000 impoverished pensioners in an attempt to recover close to R80 billion in assets and interest.
The accusations
The group has accused Transnet of stripping the Transnet Pension Fund and Transnet Second Defined Benefit Fund (TSBF) of its assets. They have also accused Transnet of trying to dissolve the fund.
Most of the pensioners have been reduced to poverty, as increases have been limited to 2% percent for the last decade.
“The Transnet fund, [is a] fund established by law. So [it is] not subject to the pension act, so they are subject to their own rules,” Swanepoel said.
According to Moneyweb, currently, 80% of the pensioners earn less than R4 000 a month and 62% less than R2 500 a month. As most were between 70 and 90 years old they can no longer find employment.
The pension fund, Transnet and the ministers of finance and public enterprises have opposed the application, “which they dismissed as being bad in law, of no substance and a waste of time, effort and money,” reported ENCA.
ENCA also reported that “in 2001 Transnet exchanged government bonds worth R7.7-billion which earned the fund R1.2-billion in interest per year for shares in M-Cell which earned no dividends.”
The shares were sold in 2006 to TSBF at a loss of over R5.4 billion.
Other class actions
There is currently another class action under way. The R699 car scheme clients are trying to sue Satinsky and three major South African banks. For the full story see Moneybags: http://tinyurl.com/pmxvwn5
*Transnet was contacted, but it declined to comment as the case was still ongoing.