TRANSPORT PENSION FUND Transnet sub-fund 15 NOVEMBER 2011

AGENDA  Background  Rule Amendments  Valuation results  Trustees duties/funding  Questions

BACKGROUND  Number of meetings in 2010/11 between Transnet and Task Team  Recommendation by Portfolio Committee  75% of CPI prospective increases  3.2% uplift  5 months pension once-off  TPF is a separate entity which is managed independently from other Transnet funds  TPF – 3 sub funds (Transport Pension Fund post 2007)  Transnet sub fund has pensioner members and 809 active members  No bonuses paid to date - rule amendments awaiting approval

RULE AMENDMENTS  Rule amendments long awaiting approval (June 2010)  Lots of pressure on employer, trustees iro pensioner expectations and comparison with TSDBF  Different rules per sub-fund :  Current : All sub funds - pen increases at 2%  Amended : Transnet - pen increases at 2% plus ad hoc bonuses  Amended : Prasa - pen increases at 75% CPI plus ad hoc bonuses  Amended : SAA - pen increases at 5.5% hurdle rate (75% CPI) plus ad hoc bonuses  None of Portfolio Committee recommendations can be paid based on current rules  Portfolio Committee recommendations would require another set of amendments subject to employer approval being obtained

VALUATION RESULTS (31 March 2011) – PC Recommendations  The Transnet Sub Fund can afford the cash flow consequences of all PC recommendations – the implementation method is to be determined, subject to employer approval Scenario (R’m)TPFTransnet sub fund Assets Current Liability PC recommendations Reserves Total Liability Surplus/(Deficit) Funding level105.2%104.0%

TRUSTEES DUTIES  It is not possible to give benefits outside provisions of rules and legislation  The Board of Trustees need to ensure that the fund’s financial condition remains sound (including reserves)  I can assure you the Transnet sub fund Board of Trustees is committed in providing better benefits to its pensioners

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