TRANSNET LIMITED

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TRANSNET LIMITED

• TRANSNET PENSION FUND ACT AMENDMENTS
• October 2006

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Table of contents

• Introduction
• Brief history of the Transnet funds
• Principles of the Act amendments
• Transnet Retirement Fund
• Transnet Pension Fund
• Conclusion

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Introduction

• In April 2006 Transnet, DPE and Labour agreed
• to allow SOE-type members continued membership in
  the Transnet Retirement Fund (TRF)
• to restructure the Transnet Pension Fund (TPF)
  into a multi-employer fund to allow continued
  membership of SOE-type members
• Act amendments are required to accommodate this
• The draft Act amendments have been approved by
  Transnet, the trustees of the three Transnet
  pension funds and Cabinet
• The draft Act amendments appeared in Government
  Gazette No. 29181 of 1 September 2006

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Brief history of the Transnet funds

• 1990-establishment of TPF
• 2000-establishment of two new funds

Railways and Harbours Pension Fund for non-White
Employees
Railways and Harbours Superannuation Fund

• Transnet Pension Fund
• defined benefit fund

• Transnet Second Defined Benefit Fund
• defined benefit fund
• for all pensioners of TPF as at 2000
• closed fund from 2000

• Transnet Pension Fund
• defined benefit fund

• Transnet Retirement Fund
• defined contribution fund
• for all new employees of Transnet from 2000

• Transnet Pension Fund (existing)
• defined benefit fund
• all those members who are not pensioners and who
  did not want to transfer to the Transnet
  Retirement Fund
• a closed fund from 2000

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Brief history of the Transnet funds

• 2006-continued membership of SOE employees

• Transnet Pension Fund
• still closed fund
• still defined benefit fund

• restructure into a multi-employer fund
• establish stand-alone sub-funds
• provide new governance structures

• Transnet Retirement Fund
• still defined contribution fund

• enable existing members to remain members
  under new SOE Employer

• Transnet Second Defined Benefit Fund
• still defined benefit fund
• still closed fund

• no amendments

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Principles of the ACT amendments (TRF)

• TRF to remain in principle a Transnet fund
• Not a multi-employer independent fund
• However, SOE Employers (to whom Transnet
  businesses have been disposed of) may also join
  as participating employers
• effectively allowing employees of SOE employers
  to remain members of the TRF
• No new employees of SOE employers to join TRF

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Principles of the ACT amendments (TPF)

• TPF still one legal entity
• Now an independent multi-employer fund
• Renamed the Transport Pension Fund
• SOE-type employers (to whom Transnet businesses
  have been disposed of) may join as a Principal
  Employers (PE)
• One Sub-Fund per PE
• Sub-Funds automatically consist of active members
• Sale agreements determine allocation of Pensioner
  and Dependant Pensioner members to Sub-Funds
• The relevant liabilities, assets, rights and
  obligations allocated to the Sub-Fund are
  determined by the Trustees, the fund valuator and
  actuary/ies
• Sub-Funds have clearly defined ring-fenced
  liabilities and assets
• PE only guarantees its own Sub-Fund

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Principles of the Act amendments (TPF)

• Principle of separation of Sub-Funds (with
  ability to work together)
• Two sets of rules
• General Rules control governance, allocation of
  costs and statutory matters.
• Special Rules control service, contributions and
  benefits.
• Two levels of trustees
• Sub-Fund Committees (SFCs) manage all aspects
  of the Sub-Funds as determined by the Special
  Rules (incl. investment policy and administration
  of benefits and assets)
• Board of Trustees (BOT) duty to control the
  governance of the fund as a whole and to allocate
  costs where necessary

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Illustration old TPF structure
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Illustration new TPF structure
Board of Trustees
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Conclusion

• Act amendments critical to Transnets
  restructuring and to legitamise the continued
  membership of the SOE members