MEMBERS of the University of Zululand Pension Fund are concerned about their financial future and are lodging protests to the fund’s board of trustees and administrators, Absa Consultants and Actuaries about low pension increases.
The bone of contention is that while the fund showed a healthy surplus of 23.2% in 2010 and should have grown substantially since then because of positive stock market figures, pension increases in recent years averaged between 3-4%.
This was the third year in a row that such low increases were granted, with the board of trustees and the administrators claiming that higher increases could ‘not be afforded’.
But according to Prof Jacobus Kotze who is coordinating the action by the pensioners involved to investigate the matter, it has since transpired that the surplus has been used by the university to fund a reduction of contributions which it should have made to the fund in accordance with the Actuary’s recommendation.
In a response to Prof Kotze’s queries, the trustees admitted that there is a direct relationship between the rate of the employer contributions to the pension fund and the affordability to grant higher increases.
To aggravate the members’ concerns, information was received that the university is now contemplating to cease contributions to the fund in the near future on the back of the recorded surplus. Pension fund rule amendments are apparently now being processed to allow for such a practice, known in the pension fund industry as a ‘contribution holiday’.
Although such action is permissible in terms of the Pension Funds Act, pensioners are of the opinion that it is not justified in view of applicable circumstances, and fear that should this be implemented, there may be no chance for improved pension increases in future.
