Pensioners take on Tongaat Hulett over ‘hijack of funds’

Three-and-a-half years after 77 irate Tongaat Hulett pensioners filed papers against their former employer, they have finally had their day in court.

Former Tongaat Hulett directors, pension fund trustees and senior managers are among 77 former employees (including 11 widows) who are supporting two former trustees who accused the company of diverting a total of R800 million pension fund profits for its own use, instead of sharing them with pensioners.

After facing lengthy legal delays, retired directors Bruce Moor of TH Sugar and Willem Hazewindus of African Products expressed immense relief when the case finally was heard before Justice P Koen in the Durban High Court last Friday.

There are two pension funds involved – The TH Pension Fund and its successor, the TH Defined Benefit Fund, which continued for company employees after Hulamin split from the group in 2007.

This fund had assets of nearly R6bn and catered for about 2 300 pensioners and 800 current employees. In 2012, in-service members were transferred to a new fund and pensioners were outsourced to an Old Mutual pension fund.

The argument is over fund surpluses generated from exceptional investment returns on the assets of the fund. In pension fund terms, an actuarial surplus is an amount by which the value of a company’s pension fund exceeds the amount it must pay out in benefits.

The Pension Fund Act provides that an actuarial surplus may be shared between the company and pensioners. However, the company claimed that the funds involved were “excess assets” and not liable to distribution.

The pensioners’ lawyers told Judge Koen that there was no such item as “excess assets” in the Pension Funds Act (PFA) and this was an attempt to hijack their rightful benefits.

“Through a systematic and well planned strategy, the company has contrived to transfer all or most of the surplus assets of the two funds to the employer surplus account and to the company, with no allocations or surplus to members or a member surplus account,” they said in court papers.

Tongaat Hulett counsel argued that the company had acted completely within the rules of the PFA, that they had considered the interests of all parties and were legally permitted to allocate all the surplus to the employer.

Judgement was reserved.

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