Transnet pensioners obtain some redress

The Transnet pensioners who were wronged as far back as 2004 have at last achieved some redress. At least, those who are still alive have.

Short-paying those who are in their sunset years, many of them tired and ailing, is simply unforgivable.

The macabre aspect to this long drawn-out matter is that the 100 959 beneficiaries of the Transnet Second Defined Benefit Fund (TSDBF) at March 2001 had dropped to 49 908 at March 31, 2018.

The full background to this matter was set out in a Moneyweb article on May 11, 2018.

Protracted class action litigation

The pensioners’ class was certified on July 31, 2014. It consists of 52 000 members. The class issued summons against the Transnet Pension Fund (TPF), the TSDBF and Transnet in 2015. The intervening six years have been taken up by protracted expensive litigation.

The Supreme Court of Appeal turned down the pensioners’ leave to appeal, but in 2018 the Constitutional Court (Pretorius and Another v Transnet Pension Fund and Another) gave the pensioners the go-ahead.

Without the funds accepting liability, the parties agreed to settlement negotiations and a settlement agreement was concluded in December 11, 2019.

Settlement offer made order of court

The court was approached to make the settlement offer an order of court.

The court agreed to apply the two-stage process to all settlements, and on February 18 granted an ex parte order with a rule nisi inviting any objections. These were communicated to members and published in the press and on Transnet’s website.

The court had to consider various objections that were raised, including that the benefits to be paid to the pensioners were not sufficient, deceased estates were excluded, no payments were to be made in respect of the alleged historical underpayments, and, if the funds had not been looted, the increases could have been paid.

Developing the common law

The court observed that it had a duty to develop the common law taking into account the interest of justice, be fair and reasonable, and that “the interests of the class members are paramount and not that of the class representatives and their legal teams”.

Professor Theo Broodryk, associate professor and head of the Stellenbosch University Law Clinic, commented that: “Although class actions were first recognised in South Africa more than 25 years ago in the interim constitution of 1993, it is an area of law that remains largely unregulated by statute or court rules. Legislative inaction has compelled the judiciary to step in and, through case law, to develop a structure for the adjudication of class actions.

“The role that our courts have played in this regard is important, especially in view of the recent increase in the incidence of class actions. In the Transnet judgment, Potterill J continued to develop the law regarding class actions and the judgment will likely constitute an important source of authority on the issue of class action settlement going forward.”

Settlement agreement

The settlement agreement was made an order of court on June 22.

Special awards

In December 2019 an amount of R10 000 less tax was made to each member. Two further payments of R10 000 less tax will be made to each pensioner in December 2020 and 2021.

South African Airways (SAA) still has to approve payments from the SAA sub-fund.

The boards of the TPF and TSDBF “may grant additional or greater lump sum awards if their rules are amended to allow them to do so”.

Pension increases

The minimum annual 2% increase will continue, and the TPF, TSDBF and Passenger Rail Agency of South Africa sub-funds will increase the amounts of the pensions payable by 11% on or by the end of the second month following the month on which the effective date of the settlement falls, and by 7% and 4% respectively in each of the succeeding anniversaries of the enhancement.

The SAA sub-fund pensioners will be paid a once-off increase to bring the pensions to where they would have been had they been awarded the 70% year-on-year inflation adjustment.

In subsequent years, the TPF and TSDBF will pay an annual increase (inclusive of the 2% minimum increase) of 70% of inflation.

The end of the saga

The pensioners had no option but to pursue the class action route, despite the risk of litigation.

The promise of the increase to match 70% of inflation was made in 1989, and broken in 2004.

The class action was only certified in 2014. Judge Potterill, Acting Deputy Judge-President of the High Court, pointed out that: “This renders witnesses herein vulnerable to memory issues … [or] passing away before testimony commences or is finalised.”

Potterill further opined that the settlement won’t restore the pensioners to a comfortable retirement, but that it “provides sufficient value to the class members in surrendering their right to litigation”.