Transnet and its pension fund have reached a "secret" deal with about 1 800 pensioners who were fed up with the pension settlements they received when they were retrenched between 1996 and 1999. The deal will save Transnet and its fund about R160 million.
The deal will see Transnet contribute an additional R82 million as a pension top-up for the about 1 800 pensioners who were retrenched between 1996 and 1999.
The Witwatersrand High Court last year ordered Transnet and its retirement fund to increase the pensions by R82 million, with interest, for the intervening period.
Transnet and the fund lodged notice to appeal and opened negotiations with the affected pensioners. Transnet offered to pay the R82 million without interest in an out-of-court settlement. The offer was put to the vote and the majority of the pensioners, who foresaw years of expensive legal wrangling, accepted.
Earlier fund merger
The Transnet Pension Fund was established in 1990, when the New Railways and Harbours Superannuation Fund (which, until then, was reserved for white employees of Transnet) and the Railways and Harbours Pension Fund for Non-White Employees were merged.
According to the judgment handed down by Judge LI Goldblatt, the new fund "inherited a huge deficit" of R17 billion from the old funds.
Of the shortfall, R8.8 billion was in respect of liabilities to pensioners and R8.3 billion was attributable to active Transnet Pension Fund members.
In effect, at the time of the merger, the Transnet Pension Fund was only 89.5 percent funded. There would have been a shortfall of 10.5 percent if the fund had had to pay a full benefit to every member.