Minnie’s Proposal for Transnet Pension Fund Amendment Bill: motivation

Meeting report

The Acting Chairperson noted that the sponsor, Hon Mr K Minnie, MP, (DA) was unable to be present and it had been arranged with the Chairperson, Ms P Mentor, that Mr C Lowe (DA) present on his behalf.

The Acting Chairperson indicated that he had a problem with this. He was adamant that according to the Rules of Parliament, only the sponsor could present his proposal. In the past bills had been removed from the agenda when the sponsor did not wish to attend. He had asked the Committee Secretary to ensure that Mr Minnie would be coming; but he had said he would not be available but had arranged with Ms Mentor that Mr Lowe would present on his behalf. At the time the Secretary did not communicate to Mr Minnie that he should let the Committee know when he would be available so the Committee could reprioritise. Whilst the Acting Chairperson appreciated Mr Lowe’s attendance he indicated that there was a precedent and the Rule was clear.

Ms S Rajbally (MF) submitted that Mr Lowe had come in good faith, and it was unfortunate that the situation had not been communicated to the Acting Chairperson.

Mr H Bekker (IFP) agreed with the Acting Chairperson that clearly Mr Lowe could not, in terms of the Rules, make a presentation on behalf of Mr Minnie. He suggested that,  to save time, the Committee listen informally to Mr Lowe, and then that Mr Minnie must appear in person at a later stage.

The Acting Chairperson agreed with that. He specifically noted that this would have to be regarded as an informal meeting and asked Mr Lowe to assist to ensure that Mr Minnie confirm a date on which he would be available, and the Committee could give him priority. He stressed that he would not like to see Mr Lowe being turned away when he was unaware of the Rules. He apologised for the mishap.

The Acting Chairperson added that Transnet should also appear before the Committee and present their case. The Department of Public Enterprises should also comment. This would be arranged by the Committee Secretary.
 
Mr Lowe fully appreciated the position. He noted that was an alternate member of the Committee and was standing in for Adv Swart. Mr Minnie and Adv Swart had met with Ms Mentor and she had said that in order not to delay this matter Mr Lowe must please present.

Mr Lowe noted that the object of the proposed Amendment Bill was to amend the Transnet Pension Fund Act, which was defined as a closed pension fund for pensioners of the SA Railway Services, which later became Transnet. It was created in 1990 and the fund was very badly managed for many years. The increases to pensioners had at best had been around 2% per year, and that needed to be addressed. The reasons why it was badly managed were set out in the presentation. In later years there had been a substantial turnaround, and with the appointment of Maria Ramos as Group Chief Executive for Transnet there had been huge improvements. Mr Lowe and Mr Minnie had spoken to Minister Alec Erwin, and he, Maria Ramos and the entire executive of Transnet were very sympathetic to the problems, and had in the past approved a small ex gratia payment to the pensioners. The Minister had indicated that he could not give a guarantee at that stage that they could increase the amounts because they had to look at Transnet as a business. Subsequently, Transnet had sold the Cape Waterfront for many billions of rands, had made share profits on the Cell C / MTN transaction, and generally increased its profits. This Bill therefore sought to amend the 2% limitation clause on the increase in pensions. Public servants and most other pension schemes would receive a 6% or inflation-linked increase. This Bill asked that the increase be a percentage equal to or greater than the increase in the consumer price index of the previous financial year. It sought to address the dire circumstances of a number of the pensioners under this scheme.

Mr Lowe noted that Transnet had made some input by way of correspondence. He said that, with respect, it was simply not considered good enough.

Mr Lowe noted that the background to the bill was set out in the presentation. It mentioned that the 2% limited increase should instead be linked to inflation. The Fund was financially viable. He believed there should be an investigation as to the running of that Fund because he did not believe the Fund managers were doing their job properly. He would ask Mr Minnie to present himself at a time suitable to the Committee to expand further.

Discussion
Ms Rajbally felt it would be only proper to leave questions until the presentation was formally done.

The Acting Chairperson thanked Mr Lowe, and reminded him that sponsors acted as individuals, not on behalf of their political party. He asked the Secretary to make the rules of the Fund as well as the Act available to Members. He said that the programme had set this matter for finalisation the following week and hoped that Mr Minnie could make himself available by then.

Mr Bekker noted, from the letter from Transnet, that Rule 31 of the Fund’s Rules included a bonus rule. This seemed to be a once-off; as there was no continuity or any promise that it would happen in the future. It would seem that there was an increase for the last year of 5.5%, being 2% on average and a 1.5% plus the annual 2%.Transnet would have to be asked what would be the future situation. It appeared that Transnet would prefer not to settle for an increase, but rather wanted to work on the basis of a bonus system. He believed that bonus system should be clarified.

The Acting Chairperson concurred, and added that the Committee would invite both employer and trustee to present. 

Mr Lowe suggested it might be useful to get an opinion from Minister Alec Erwin and possibly the Chief Executive Officer of Transnet. His father was a Transnet pensioner, and after ten years all the pensioners had ever received was a 2% annual increase and a once off 1% of annual pension, which did not amount to much. The Fund Managers suggested that it be left up to them to decide when to pay bonuses, but this could be in another ten years, despite the profits that Transnet had made from the Waterfront sale. He declared he did have an interest as his father was a member of the pension fund, and would have to recuse himself from the formal meeting.

The Acting Chairperson noted that the Committee would also check on the matter with the  Financial Services Board. He reiterated that Transnet, and possibly the Minister of Public Enterprises, would need to brief the Committee.

Mr Bekker suggested that when writing to Transnet it be specifically pointed out that the Committee wished to enquire about the continuity and possibilities in respect of the bonus system. 

The Acting Chairperson proposed that the letter to Transnet state that the Committee had considered the contents of their letter, and would like to engage them on every aspect of their presentation. The delegation must include senior management, trustees and an actuary.
 
The meeting was adjourned.