Transnet to unveil pension fund turnaround

STATE-owned transport company Transnet is today expected to unveil details of the turnaround of the once-troubled Transnet Second Defined Benefit Fund, which is still reeling from a R17bn deficit accrued over the past six years.

The transport group said yesterday that it would make a “major announcement relating to the company’s pension funds”. It did not elaborate.

CEO Maria Ramos raised concern about the low monthly pension payments that some of the 45000 pensioners were getting.

She might provide details of how Transnet plans to match the government old-age pension grant and also reveal the financial status of the fund.

Ramos said last month that the fund was in a “significant surplus position” but that the extent of the excess would be made public only after an independent actuarial valuation.

The fund’s deficit was significantly reduced after it sold its stakes in MTN and Cape Town’s V&A Waterfront for R5,2bn and R3,1bn respectively.

Ramos could also announce plans to introduce an annual bonus increase over and above the current 2% that fund members are getting.

She said it was “outrageous” that some fund members were receiving as little as R300 a month. Priority would be given to such pensioners, particularly those who had long service with Transnet.

Transnet has two other pension funds, the defined-contribution Transnet Retirement Fund and the Transnet Pension Fund, both for current employees.

The Transnet Second Defined Benefit Fund, like the other two, was established in November 2000 but is specifically for the benefit of retired members and qualifying beneficiaries. The latter had 45075 members in the 2005-06 financial year, Transnet said in its annual report.

The total membership rose to 87236 when widows and children of these pensioners were included.

Ramos said last month that the settlement of the Transnet Second Defined Benefit Fund would help reshape the company’s balance sheet, a move that would enable the parastatal to focus on improving the efficiencies of its rail, ports and petroleum pipeline business units.

Transnet has disposed of a number of noncore businesses over the past two years.

Apart from the MTN and Waterfront stakes, other disposals included national carrier South African Airways, commuter rail operator Metrorail, a 49% stake in baggage handler Equity Aviation Services, and parts of telecommunications company Transtel.