Union wants answers from Eskom pension fund

One of the unions represented on the board of trustees of the Eskom Pension and Provident Fund (EPPF) is seeking legal advice about the pension arrangements that, bar interventions by the minister of public enterprises, would have seen Eskom CEO Brian Molefe walk away with R30 million after less than two years of service.

Solidarity energy industry leader Deon Reyneke told Moneyweb the union would consult with senior council on Monday and, if necessary, litigate to determine whether the EPPF applied the correct rules to Molefe’s situation and whether the EPPF can simply shift the responsibility in this regard to Eskom.

This follows after the Democratic Alliance in court papers questioned the “early retirement” payout to Molefe on the basis the fund rules only provide for early retirement from the age of 55. Molefe is 50 years old.

The DA argues that Molefe in fact resigned and as such is, in terms of the EPPF rules, only entitled to the contributions he made plus interest.

The EPPF said in a statement earlier this week: “Retirement in terms of rule 28 enables a member to retire from EPPF from age 50 with service as recognised and agreed upon by Eskom Holdings SOC Ltd (‘the employer’).”

The heading of rule 28 reads: “Retrenchments”

The fund specifically relies on a subsection that gives the board discretion, but stands under the same heading – Retrenchments.

Rule 30 deals with resignations and determines that members who resign from their employment voluntarily are entitled to their accumulated contributions, namely what was paid into the pension fund plus interest. It also provides for certain elections the member may make regarding the format of the payout.

It also provides that the Eskom board will have the final say whether a member has resigned or is going on early retirement, but again that only applies to members aged 55 and older.

Moneyweb asked the EPPF how a rule applicable to retrenchments can be applied to Molefe’s situation while it has been stated publicly by Eskom that he took early retirement (this is disputed by the DA, which insists he resigned).

The fund merely passed the buck back to Eskom: “EPPF does not involve itself in the exit negotiations between the employer and employee, or in the arrangements of the business of the employer. The granting of early retirement benefits without penalties can only be initiated at the request of the employer. This is usually preceded by an agreement between the employer and the affected employee, of which EPPF is not party to. In this regard, Eskom and/or Mr Molefe would be better placed to offer a response.”

Eskom board spokesperson Khulani Qoma said in light of the pending litigation with the DA, the board would not comment on Molefe’s reinstatement any further.

With regard to the amount of R30 million, the EPPF stated: “The employer may grant additional pensionable service in terms of rule 21 (4) to meet the exit criteria of the employee. These may be negotiated between the member and the employer upon exit from employment, which negotiations EPPF is not a party to. The cost of this additional pensionable service is carried by the employer.”

The fund confirmed that Eskom paid the fund R30.1 million to ensure the fund remains “financially neutral”, in other words that other members are not prejudiced.

Eskom chair Dr Ben Ngubane reportedly said that Eskom agreed when Molefe was employed to “buy” him 10 years’ worth of pension. This was done after the cabinet appointed him for five years, and not permanently as expected. Ngubane said Molefe would have lost a lot if he moved from Transnet to Eskom on the five-year contract and the pension agreement was made in an effort to compensate him for such loss.

Reyneke said Solidarity wants to know if this payment by Eskom to the EPPF, which is considered to be way above market-related, is lawful.

It also wants to know whether the board misled the pension fund about the nature of Molefe’s departure and whether the EPPF board of trustees can merely rely on what the Eskom board told it in this regard while the circumstances around his departure were widely published and clearly indicated something other than a retrenchment.

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