Former pension fund trustees believe R363,2 million should have been paid to the company’s 2300 pensioners.
An epic battle against the Tongaat Hulett Pension Fund by a spirited group of pensioners came to an end last month when the Appeal Court rejected their last-gasp attempt to recover R363,2 million they believed due to them.
For former Tongaat Group company directors Bruce Moor and Willem Hazewindus it was a bitter end to a five-and-a-half-year legal battle that has cost about R2,75 million, of which about R500 000 was contributed by 77 company pensioners (or their widows).
The rest is from their own savings.
The ‘David and Goliath’ battle, as it has been described, stemmed from the splitting off of Hulamin from the group in 2007.
Moor and Hazewindus, both former pension fund trustees, believe the R363,2 million should have been paid to the company’s 2300 pensioners, being 20 percent of an R1.8 billion surplus following the winding up of the TH Pension Fund after the Hulamin split.
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, the TH Defined Benefits Fund, and pensioners were outsourced to an Old Mutual pension fund.
The argument was 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.
Their argument was supported by a full bench of the Supreme Court of Appeal in Bloemfontein, which ruled on May 17 that the Durban High Court had correctly interpreted the Pension Funds Act and that Tongaat Hulett had been within the law in allocating the money back to the employer. They ruled that the company had followed proper procedures.
The court also rejected the argument that there was a conflict of interest and that the pension fund board had been weighted in favour of the company.
“There were an equal number of employer and member representatives. All trustees are invariably members of the fund. That is a case in the boards of all pension funds. To that extent there will always be an unavoidable structural conflict of interest in all funds.” Moor and Hazewindus had been members of the board and had not complained about the board’s composition before.
Speaking after the judgement, Moor said from his Kloof home that he was ‘more than disappointed’ with the outcome.
“We will pay a very high price for following our consciences as former trustees,” he said, adding that he and Hazewindus had received a ‘flood’ of emails of support after the judgement.
Tongaat Hulett declined to comment.