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TRANSNET SECOND DEFINED BENEFIT FUND 15 NOVEMBER 2011.

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Presentation on theme: "TRANSNET SECOND DEFINED BENEFIT FUND 15 NOVEMBER 2011."— Presentation transcript:

1 TRANSNET SECOND DEFINED BENEFIT FUND 15 NOVEMBER 2011

2 Transnet Second Defined Benefit Fund
INTRODUCTION Fund is currently solvent with a surplus of R2.7 billion Fund has been well managed up to now Fund cannot afford to implement all of PC recommendations Fund can almost implement two of the three recommendations by the PC (68% of CPI subject to affordability plus two of the 5 months backpay and another month proposed for November 2011) Fund cannot afford both 75% of CPI subject to affordability pension increases and current bonus structure The Trustees cannot propose/approve a rule amendment that causes an unsound financial position Transnet Second Defined Benefit Fund

3 Transnet Second Defined Benefit Fund
FUND FINANCIAL POSITION (R ‘bn) Inception March 2002 2004 2006 2008 2010 2011 Assets 19.9 16.0 15.1 19.2 19.7 18.8 Liabilities 17.9 19.0 18.5 22.2 16.9 16.1 Surplus/ (Deficit) 2.0 (3.0) (3.4) 2.8 2.7 Funding level 111.4% 84.5% 81.4% 86.5% 111.1% 116.8% 117.0% Transnet Second Defined Benefit Fund

4 Assets 18.8 Liabilities 16.1 19.3 20.1 20.8 24.0 Surplus/(Deficit) 2.7
TSDBF CANNOT AFFORD PC RECOMMENDATIONS Scenario (R’bn) Current 75% CPI only 75% CPI plus 5m backpay 75% CPI plus 5m backpay and uplift 75% CPI plus 5m backpay, uplift and bonuses Assets 18.8 Liabilities 16.1 19.3 20.1 20.8 24.0 Surplus/(Deficit) 2.7 (0.5) (1.3) (2.0) (5.2) Funding level 117.0% 97.5% 93.4% 90.6% 78.5% Total cost of PC recommendations R4.7 billion (2nd last column) Total cost incl. bonuses of PC recommendations R7.9 billion (last column) Transnet Second Defined Benefit Fund

5 Transnet Second Defined Benefit Fund
FUND CAN ALMOST IMPLEMENT 2 OF THE 3 PC RECOMMENDATIONS TSDBF already implemented two of the five months back pay since discussions commenced TSDBF Board approved a 10% bonus for November 2011 (Transnet Board still need to approve) covering more than another month’s backpay TSDBF trustees are giving serious consideration to a 68% of CPI increase subject to fund affordability TSDBF cannot continue the current bonus structure as well as an improved CPI linked pension increase policy TSDBF cannot implement the 68% of CPI subject to affordability pension increase policy and continue to pay future bonuses The 3.2% uplift cannot be afforded There may be conflicting views from pensioners groupings on whether CPI linked pension increases or bonus payments are preferred. Transnet Second Defined Benefit Fund

6 Transnet Second Defined Benefit Fund
IN CONCLUSION TSDBF already implemented two of the five months back pay since discussions commenced and another bonus payment is proposed for November 2011 This equals three months out of the five months back pay recommended by the PC TSDBF can implement an improved 68% of CPI subject to affordability pension increases subject to affordability immediately without unnecessary delay OR the current bonus structure Transnet Second Defined Benefit Fund

7 Thank you for inviting us to present to you…
Any questions? Transnet Second Defined Benefit Fund


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