Transnet Pension Fund Amendment Bill: deliberation on Proposed Changes

PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES
TRANSNET PENSION FUND AMENDMENT BILL: DELIBERATION ON PROPOSED CHANGES
20th October 2006

Acting Chairperson: Mr P Hendrickse (ANC)

Documents handed out:
Transnet Pension Fund Act : Proposed additional amendments (see Appendix)
Transnet Retirement Rules
Aviation Union of Southern Africa (AUSA) document
Hunter Employee Benefit Law
Transnet Pension Fund Amendment Bill [B30-2006]

SUMMARY
The purpose of the meeting was to review the Transnet Pension Fund Amendment Bill and deliberate, and if possible agree upon the changes proposed to some of the clauses by Transnet. A list of the proposed changes was circulated. Mr Carrim expressed concern no representatives were present from the Unions and no apology had been given. Transnet briefed the Committee on the two issues of principle that had caused on-going debate. These related to why the provisions on new employees should be dealt with in the Act rather than the Rules, and why new employees of State Owned Enterprise employers should not be permitted to join the Transnet Retirement Fund. Members raised questions on the practical implications of including matters in the Rules and not the Act, the percentages of members who had elected to transfer to their new employer funds, the arguments related to the prevention of strike actions, and the issue of delays. The Aviation Unions concerns were raised and discussed briefly..

Transnet had proposed a number of changes to the wording of the Amendment Bill, which were discussed. The wording of Clauses 1 to 4 was discussed and agreed to. The wording relating to the definitions of “actuary” was discussed. A phrase was left out of Clause 1(c) as it was redundant. The wording of clause 1(d) was discussed but no changes were made. Clause 1(f) was changed by putting the word” Rules” in lower case. The reference to the Minister was changed in Clause 1(g). The wording of clause I(h) was changed to replace “every” with “any”. Clauses 1(i) and (k) were discussed but no changes were made, other than correction of a typographical error, which referred to (b) instead of (a). Clause 4 had been taken over from the original wording used when the Fund was formed. The legal advisors would check that “New Fund” was defined and that the references were consistent.

MINUTES
Mr Carrim expressed concern that the matters being discussed at this meeting were supposed to have been discussed and agreed upon between the Committee, Transnet and the Unions, but that there was not even one representative from the Unions present at the discussions, and no apology had been given. Members agreed that the meeting would proceed as planned. They agreed also that in the discussing the changes to the clauses, the Chairperson would mention the concerns raised by the Unions.

Ms Carla Prentice (Executive Manager, Transnet) briefed the Committee on the two issues of principle that had caused on-going debate. The first question raised was why the issue of new employees should be dealt with in the Act rather than the Rules of the Transnet Retirement Fund

Ms Prentice said that Transnet’s core argument was that Transnet believed that the broad intention of the Act had envisaged a legislative requirement to determine membership of the Transnet retirement schemes. One of the arguments put forward was that there would be a scarcity of management resources if such resources had to concentrate on this matter if it were placed in the Rules. Some members had not agreed that this was a strong reason, and suggested that Transnet look further into this argument.

The second question raised was why new employees of State Owned Enterprise (SOE) employers (who had purchased the former Transnet businesses) should not be permitted to join the Transnet Retirement Fund. Ms Prentice highlighted that the main reason for this was that Transnet had an important role in the development of the economy of South Africa and Transnet believed that it can play the role properly if it was allowed to function as a focused rail and freight business. Therefore the non-core businesses were disposed of, and the employees who were in those non-core businesses were no longer to have connections with Transnet.

Discussion
Mr J Stephens (DA) asked what the implications would be if the provision stating that new employees were not allowed to join the Transnet Fund were stated in the Rules and not in the Act.

Ms Prentice responded that if this were stated in the Rules, it could possibly lead to the detraction of management time. Ms Prentice said she did not believe that the Unions would strike, and could not comment whether the Unions had a mandate. She added that if the matter were addressed in the Rules, Transnet would be open to a lot of pressure.

Mr Y Carrim (ANC) suggested that because amendments were being made to the principal Act, a copy of that principal Act should be circulated to enable the Committee to see that it had made amendments to all the affected areas.

The Acting Chairperson asked what the total number of employees was in the pool, and what percentage was represented by the 946 Metrorail members who had elected to transfer.

Ms Prentice responded that 946 out of 6000 members had elected to transfer from the Transnet pension funds to the South African Rail Commuter Corporation Ltd (SARCC) Provident Fund.

Mr Carrim commented that the document circulated by Transnet (in particular the section entitled “Memo”) was quite repetitive. He also said that Transnet had a very strong argument as to why new employees of SOE employers should not be permitted to join the Transnet Retirement Fund. Mr Carrim said the Committee needed to apply its mind to this issue.

The Acting Chairperson said that the argument used by Transnet, that putting the prohibition of new employees of SOE employers in the Act would prevent Unions from striking, was not a strong argument as the Act did not prevent Unions from striking. He also mentioned that Transnet was going to appoint external managers to run the Pension Fund and he did not understand what Transnet meant by saying that putting this prohibition in the Rules would take management away from focusing on their core responsibilities.

Ms Prentice explained that Union members were involved as trustees of the Pension Fund and it would be management time that they would be using to debate such issues.

Mr Carrim said that Transnet was inaccurate in stating in its Memorandum that the Bill was being delayed. He added that the ongoing discussions resulted from the fact that all issues had to be decided on their merits. There should be no accusations of delay.

Ms Prentice withdrew the word “delay” and said that it should be replaced with the words “ongoing discussions.” She apologised about the misconceptions that could have been caused by use of that word.

The Acting Chairperson commented that it was also not correct to refer to “delays” because it could equally be argued that Transnet, by failing to agree to the views of the Unions, was causing “the delay”.

The Acting Chairperson (ANC) read out the out the document received from the Aviation Union of Southern Africa (AVUSA).

Ms Prentice, in response to Avusa’s document, said that the Unions should be raising their concerns and undertaking negotiation with their employers, as the issue of the new employees related to the terms and conditions of the new employment.

Mr Carrim (ANC) said that considering the objections that the Unions had made the last week, the argument presented by AVUSA was a weak one, but that did not mean that it had no merit. He said that if the Unions were serious, they should have come to parliament to engage with the Committee. Mr Carrim said that he would try to present the best argument he could for the Unions, as he done with Transnet, in fairness towards the Unions. He said the Committee should not use AVUSA’s argument as the only source of motivation but that they should also consider the discussions at the last meeting when the Unions were present. Mr Carrim raised concern that the Unions had said the matter of the new employees had not been settled, although Transnet disagreed with this view. He said that he thought it was fair to say that the issue of the new employees arose after settlement because even the Minister had said that all issues had been resolved.

Ms Prentice read out the clause that related to the settlement terms as stated in the circulated Memorandum.

The Acting Chairperson (ANC) commented that the clause was saying that current members could stay in the Fund, but the clause was rather silent on the new employees.

Ms Prentice mentioned that she had requested the Minutes of the meeting of the Board of the Pension Fund.

Changes to the Amendment Bill proposed by Transnet.
A document had been circulated by Transnet, containing a number of proposed changes to the wording of the Amendment Bill. It was agreed that those issues on which a consensus was reached at this meeting would not need to be discussed again, but would be regarded as agreed upon and incorporated into the Amendment Bill draft.

The changes related to the powers of the Board of Trustees, the process for rule amendments, and minor technical amendments, or replacement of certain clause numberings. These suggestions had been forwarded to the State Law Advisors.

Discussion
Clause 1
Mr Carrim asked for clarity as to why the word “actuary” was replaced with the word “valuator’ in the definitions contained in clause 1.

Ms Prentice responded that an actuary was someone who studied and passed the relevant examinations. A valuator was always an actuary, but in addition had been formally appointed by the Fund.

Following that explanation, the Committee approved the use of the word “actuary.”

Mr Carrim asked why the words “whose entitlement to such pension is” as stated in clause 1 (c) were considered necessary. He felt that they could be deleted.

Ms Prentice suggested that the word “entitlement” instead of “entitled” be used in clause 1(c). She agreed with the deletion suggested by Mr Carrim..

Mr Carrim (ANC) expressed concern that the Bill was written in pre-1994 English and was quite gender insensitive, but he would not take these points further. He added that the writing style of the Bill was not reflective of the new democracy and requested that next time simple English must be used.

Mr Carrim expressed further concern relating to the definition of “employer” as contained in clause 1(d). He said that the words “or an SOE employer” would be problematic as they would suggest that Transnet was not an SOE. He suggested that the words “or another” be used.

The Acting Chairperson believed that the issue raised by Mr Carrim was not really a problem because a detailed definition of “SOE employer” was already included for the purposes of this Bill.

All members agreed that in clause 1(f) the word “Rules” should be in lower case following Ms Prentice’s explanation that there was a specific definition for upper case rules

Transnet had suggested that clause 1(g) be changed. All members agreed that the words “the Minister of Public Enterprises or” should be deleted and left as “shareholder Minister.”

Mr Carrim (ANC) asked, in relation to clause 1(h)(b), why the word “every” rather than “any” was used. He said that “every” implied “all of them together”, whereas use of the word “any” would enable each SOE employer to be treated differently. All members agreed with Mr Carrim that “every” should be replaced by “any” in that clause..

Mr Carrim further asked why the word “all” as opposed to the word “the”, in referring to special rules, was used in clause 1(i).

The Acting Chairperson responded that “all” was used because there were three types of special rules, not just one.

Mr Carrim mentioned that the name “SOE employer” in clause 1(k) was somewhat ambiguous.

Ms Prentice responded that the words “SOE Employer” used in the title could cause confusion, but she added that the body of the definition clarified that it was intended to refer to any other public entity that had links to government.

Mr Carrim asked, in relation to clause 1(k)(b), what was meant by the inclusion of the words “contemplated in paragraph (b).”

Ms Prentice responded that this was a mistake and it should read “contemplated in paragraph (a).”

Mr Carrim asked who the “other beneficiaries” were.

Ms Prentice said that the clause was worded that way to make sure that nobody would be left out. There was no specific definition ascribed to “other beneficiaries”.

Clause 4
Ms Prentice then went on to Clause 4. She said that this clause had been formulated when the Fund was formed, but this wording was almost identical to the wording of the original clause.

Mr Carrim asked the legal advisors to verify that the words “New Fund” were defined in the principal Act.

The Committee informally adopted the changes reflected above. They agreed to continue with the deliberations in the following week.

The meeting was adjourned.
 

APPENDIX
TRANSNET PENSION FUND ACT
Portfolio Committee meeting
Proposed additional amendments:
17 October 2006


Powers of the Board of trustees:

(5) The board of trustees of the Transport Pension Fund –
(a) must exercise the powers contemplated in sub-sections (3) and (7), section 5(3)(a), 6(1) and 10;
(b) without derogating from the powers of the Sub-Fund Boards and subject to the Act and the Rules, must direct, control and oversee the operations of the Transport Pension Fund and, to this end, may take such steps as may be necessary to resolve disputes, if any, between Sub-Fund Boards.

Rule amendments:

Any amendment of -
(a) the General Rules shall be made by the board of trustees subject to the approval of all the Principal Employers or, if not every Principal Employer gives such approval, subject to the approval of a majority of the Principal Employers and of the Minister; and
(b) the Special Rules applicable to a Sub-Fund shall be made by the applicable Sub-Fund Board subject to the approval of the applicable Principal Employer

If, in the opinion of the valuator of the Transport Pension Fund, an amendment to either the General Rules or Special Rules may affect the financial condition of that fund, an amendment may only be made with the approval of the Minister, acting with the concurrence of the Minister of Finance

TSDBF amendments

The Minister may by notice in the Government Gazette, with the consent of the trustees and Transnet and with effect from a date stipulated in such notice, determine that persons or categories of persons now in receipt of pensions and/or benefits paid by Transnet or who, upon the happening of a future event, will become entitled to a pension and/or benefit paid by Transnet, will no longer be entitled to such pensions and/or benefit and will instead be entitled to pensions and/or benefits paid by the TSDBF.

Provided that in the event that the Regulations issued  in terms of section 4 of the S.A Transport Services Act, no 65 of 1981, are repealed as contemplated in Part 6 of Schedule 2 of the Legal Succession to the South African Transport Services Act, no 9 of 1989, any person entitled to a benefit in terms of such Regulations shall in terms of the Act and with effect from the date of the repeal of such Regulations,r become entitled to receive benefits from the TSDBF which are no less favourable than that which such person received in terms of the Regulations