By JANA MARAIS Business Times
Hundreds of former Transnet employees are suing the parastatal after allegedly being short-changed by the pension fund following their retrenchments between 1996 and 1999.
At the time, an actuarial study showed the pension fund was 11% underfunded, prompting an actuarial recommendation that all cash payouts from the fund be cut by 11%. The pensioners are now claiming this 11%, interest of 15.5% a year and legal costs from the Transnet Pension Fund, the Transnet Second Defined Benefit Fund and the Transnet Retirement Fund.
Cape Town-based Hendrik Birkholtz is spearheading the class action following a ruling in 2006 in a similar case that the Transnet pension fund make payments to 1800 pensioners, the so-called Transnet Action Group (TAG).
A confidential settlement was reached between Transnet and the TAG, with Transnet reportedly paying R82-million to cover the shortfall.
When Birkholtz heard of the TAG case in 2007 he tried to claim money from the fund but was told he needed to be part of the class action to benefit.
"When I left Transnet, I had the option of a lump-sum cash payout or cash and a monthly pension. I chose the lump-sum payout - in retrospect a great decision given the meagre 2% increases Transnet's pensioners receive annually," said Birkholtz, a former rolling stock manager.
"I decided to start a new class action because there are thousands of former Transnet employees, many of whom are struggling to survive, across the country who are entitled to that 11%."
According to Birkholtz the cost to the pension fund, should the court find in favour of the more than 600 plaintiffs, is more than R20-million.
Judgment is expected in the next two months, but Transnet employees can still join the class action, said Birkholtz.
The plaintiffs argue in court documents that the deficit was partly due to monies owed to the fund by Transnet, or the government as a guarantor of Transnet's debt, following the transfer of all assets of SA Transport Services (SATS), including the underfunded SATS funds, to Transnet in 1990.
At the time, R17.1-billion was owed to the Transnet pension fund, but only R10-billion was paid by Transnet, the documents show. The shortfall on the fund due to the unpaid debt on March 31 1996 was at least R3.2-billion.
"Had the balance of the debt been taken into account, the fund would have been at least 100% funded," say the papers.
Other arguments include that Transnet is obligated by law to fund any shortfalls, and that the fund was not allowed to discriminate between the 1800 TAG members, who got a top-up, and other members.
Peet Maritz, principal officer of the Transnet pension fund, said the payments were made in line with the rules of the fund, and were based on the fund's funding levels.
At the time, an actuarial study showed the pension fund was 11% underfunded, prompting an actuarial recommendation that all cash payouts from the fund be cut by 11%. The pensioners are now claiming this 11%, interest of 15.5% a year and legal costs from the Transnet Pension Fund, the Transnet Second Defined Benefit Fund and the Transnet Retirement Fund.
Cape Town-based Hendrik Birkholtz is spearheading the class action following a ruling in 2006 in a similar case that the Transnet pension fund make payments to 1800 pensioners, the so-called Transnet Action Group (TAG).
A confidential settlement was reached between Transnet and the TAG, with Transnet reportedly paying R82-million to cover the shortfall.
When Birkholtz heard of the TAG case in 2007 he tried to claim money from the fund but was told he needed to be part of the class action to benefit.
"When I left Transnet, I had the option of a lump-sum cash payout or cash and a monthly pension. I chose the lump-sum payout - in retrospect a great decision given the meagre 2% increases Transnet's pensioners receive annually," said Birkholtz, a former rolling stock manager.
"I decided to start a new class action because there are thousands of former Transnet employees, many of whom are struggling to survive, across the country who are entitled to that 11%."
According to Birkholtz the cost to the pension fund, should the court find in favour of the more than 600 plaintiffs, is more than R20-million.
Judgment is expected in the next two months, but Transnet employees can still join the class action, said Birkholtz.
The plaintiffs argue in court documents that the deficit was partly due to monies owed to the fund by Transnet, or the government as a guarantor of Transnet's debt, following the transfer of all assets of SA Transport Services (SATS), including the underfunded SATS funds, to Transnet in 1990.
At the time, R17.1-billion was owed to the Transnet pension fund, but only R10-billion was paid by Transnet, the documents show. The shortfall on the fund due to the unpaid debt on March 31 1996 was at least R3.2-billion.
"Had the balance of the debt been taken into account, the fund would have been at least 100% funded," say the papers.
Other arguments include that Transnet is obligated by law to fund any shortfalls, and that the fund was not allowed to discriminate between the 1800 TAG members, who got a top-up, and other members.
Peet Maritz, principal officer of the Transnet pension fund, said the payments were made in line with the rules of the fund, and were based on the fund's funding levels.
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