The National Economic, Development and Labour Council (Nedlac) - the tripartite negotiating body consisting of labour, business and government - is deadlocked on how the more than R80 billion in pension fund surpluses should be divided up.
The only agreement all three parties have apparently reached, is that they will talk to no one about the deadlock, adopting a see-no-evil-speak-no-evil-hear-no-evil approach and leaving fund members in the dark.
Personal Finance understands that one of the issues delaying agreement on legislation to distribute the massive pension fund surpluses is the concern of organised business about claims arising from members who have changed from defined benefit (a pension at a pre-determined level) to defined contribution (only contributions are predetermined) funds. Members who have changed funds since the early eighties may have claims to a share of the surpluses in those funds.
The hot debate over the ownership of surplus assets in pension funds has been raging for a few years now. It has been before Nedlac for most of this year with Trevor Manuel, the Finance Minister, giving repeated extensions to deadlines to reach agreement.
Surpluses built up in funds for many reasons, including better than expected investment returns from the funds' assets, and it is believed that pension fund members who were retrenched, retired or transferred to other funds may have lost out on their fair share.
Court cases have highlighted the absence of an automatic right to a share in a surplus. But employers are in a position to get their hands on the surplus either when a fund closes down or by taking contribution holidays in an on-going fund.
Draft amendments to the Pension Funds Act early in 1999 were thrown out following objections from the trade union movement, the Congress of South African Trade Unions (Cosatu).
The draft Pension Funds Amendment Bill allowed for a surplus to be repatriated to an employer after a deal was negotiated with all the stakeholders. The Bill would have given members and former members the right to full disclosure on the status of a fund and the surplus. The Bill called for at least a two-thirds majority vote before the distribution plan could be submitted to the Pension Funds Registrar for approval.
In February this year, the Financial Services Board (FSB) drew up a discussion document setting out how surpluses should be distributed. At the time Jeremy Andrew, chief actuary at the FSB, was fairly confident that once the "several points of disagreement" with Cosatu could be ironed out, consumers would see draft legislation circulated for comment within a few months. This did not happen.
The pension fund surplus issue was kicked into the political arena when it passed to Nedlac in about March this year.
Almost six months later, Manual started losing patience with the inability of labour, business and government to reach agreement and set a deadline for the end of August. The last day of August came and went and a "trilateral meeting was held outside Nedlac" at the office of the Deputy Finance Minister on Friday evening.
Personal Finance has heard that the meeting ended after midnight and now the resounding silence from the parties indicates that there is still no consensus, or if there is, nobody is saying.
Attempts by Personal Finance to obtain at least the main points of the disagreement between the parties drew a blank and all queries were referred to the office of the Deputy Finance Minister, Mandisi Mpahlwa, who was "on study leave" this week.
So, for the moment, nobody is going to get a share of any pension fund surplus in an on-going fund. It belongs, as John Murphy, the pension fund adjudicator, has often said, not to past or present fund members, not to employers, but to the fund itself.
Present situation
The existing situation regarding surpluses is that:
* Neither you nor your employer has the right to a surplus under current legislation;
* Any rights must be obtained through the rules of a fund;
* Where the rules are silent, the Supreme Court of Appeal has suggested that stakeholders should negotiate the distribution of a surplus and change the rules in order to carry out the distribution;
* The Pension Funds Registrar must register a rule giving your employer a right to any residual surplus on the closing down of a fund, provided certain conditions are met; and
* Your employer may repatriate any residual surplus when your fund is closed provided the rules have been amended to allow it.