Former Tongaat-Hulett company director Bruce Moor of Cowies Hill writes: The article titled “Appeal court crushes pensioners’ hopes” in The North Coast Courier of June 22 refers.
The article is in general an accurate interpretation of the judgement handed down by the Supreme Court of Appeal (SCA), but I must point out that we believe this judgement was flawed in a number of respects.
These included both of the main issues mentioned in your article. 1. Actuarial surplus and “excess assets”: In terms of the Act, the only pension fund monies that can be allocated to the employer are apportionments of actuarial surplus made under Section 15C of the Act.
The method for calculating actuarial surplus is clearly spelled out in the Act – in a valuation, it is the remaining value of fund assets after subtracting the direct member liabilities, the contingency (solvency) reserves and any unused surpluses previously allocated.
The SCA accepted that the trustees “knew they were allocating surplus” to the employer and assumed that this surplus was actuarial surplus.
This was not possible, as no valuation had been done to determine the actuarial surplus.
What the trustees allocated was a portion of so-called “excess assets” (a term not found in the Act), which comprised the contingency reserves and an unknown amount (if any) of actuarial surplus.
This was in contravention of the Act. 2. Board weighted in favour of the Company: The SCA accepted a statement by the Fund that we had not raised the issue of board composition and company bias before the litigation commenced.
This was simply not true.
In the course of our initial complaint to the Pension Funds Adjudicator, copies of correspondence between me and the Principal Officer, Ms Davidson, were filed.
I specifically stated my concerns about these issues in letters of July 5, 2011 and May 16, 2012, and in between on September 6, 2012 Ms Davidson acknowledged that “we recognise that this is not an area for complacency” but took no effective corrective action.
All this before we learned of the conversion and outsourcing proposals, when the issue assumed far more serious proportions. I have addressed these two issues because they were highlighted in your article.
However, they are only two of a number of issues on which we believe the SCA judgement was in error.