Retirement funds - engineering and metal industry

Surplus apportionment agreement reached for retirement funds in the engineering and metal industry.

There are many employer enterprises operating in the construction sector who are registered with the National Bargaining Council for the Engineering and Metal Industry and who with their employees participate in the Engineering Industries Pension and Metal Industries Provident Funds.

Surpluses have been accumulating in these funds since the 1950`s and are in the order of R20 billion. The employers under the banner of SEIFSA and the trade unions, mainly the National Union of Metalworkers of South Africa, have been bickering about how  the surplus apportionments were to be affected for decades. The Financial Services Board during 2002 also attempted to assist the Trustees of the Funds with facilitation to resolve the matter.

Because these Funds were established under the former Industrial Conciliation and subsequent Labour Relations Acts, the surplus apportionment legislation formulated in terms of the Pension Fund Act did not apply. The matter had twice gone to court, and eventually the representatives of the parties agreed that it should be applied in accordance with the surplus apportionment legislation of the Pension Fund Act. This means that the Trustees of the Funds will now be required to prepare and submit surplus apportionment schemes for approval of the Financial Services Board which could take some time to complete and approve.

It appears the Trustees of the Funds have agreed in principle to allocate some R11 billion for distribution to former members mainly in the form of cash and the remaining R9 billion which is the employer`s share will go towards increasing pension benefits to employees.

It is estimated that there are about 1,5 million former members but the beneficiaries of the former members who passed away before 1 April 2008 are excluded from receiving any benefit.

Pieter Rautenbach