This page is devoted to explaining the IBM Pensions situation in South Africa.
In South Africa, the Defined Benefit pension fund members are
quite well mobilised and have formed a Pension Fund Action Group (PFAG).
Their aim is to protect the interests of approximately 500 beneficiaries of the fund.
By South African law, at least 50% of Trustees have to be members elected by members.
Some of the PFAG Committee Members have been elected as
Member Elected Trustees and were in conflict with the
Company Appointed Trustees during Trustee Meetings.
For more information see the following:
Chronology (Contents in reverse date order)
- Oct 2007
The member trustees
are giving members the opportunity to outsource on Nov.1 with a choice of
With profit annuity, which
would raise current pensions by approx. 69% with guarantees of the current (and
An annuity with guaranteed
A combination of the “With
Profit” annuity and a living annuity
A living annuity (for members
with transfer values in excess of R 1500k
Stay in the IBM fund.
Indications are that few, if
any, members will opt to stay in the IBM fund, which will be closed in a year or
See the brochure.
- May 2006 The plan for Elected Trustees to take over is implemented.
2005 Newsletter 27 related the UK to
the South Africa position which linked the letter
explaining how the IBM South Africa scheme was being moved out of IBM's control.
- Jan 2005 information:
Ian Andrew comments. Full excerpt: This raises some interesting questions as
to how this [world wide pensions requirement] was calculated. I can only speak
from the South African perspective. I know for a fact that the IBM South Africa
Pension Fund has not cost IBM a single red cent for many years. If this is
increased 100%, the cost remains a big fat Zero. They have been severely
criticised for taking 'contribution holidays'. If needs be I think that can find
out exactly when the last contribution was made by IBM. In the last reported
year's balance sheet the Fund made immense capital growth and it's income was
way in excess of it's outgoings. I have just received a pension increase of 2.8%
All of these calculations are made in Local Currency, the exchange rate
fluctuations do not make any difference. The Trust Fund is balanced in local
currency, it's payments are in local currency. The fund is so flush with cash
that IBM is trying to get it's hands on what is perceived to be 'The Surplus'.
Like in all countries where IBM can get away with it, the South African scheme
has been closed for some years, all new hires go into a 'Provident Fund', which
seems to be not dissimilar to a US Cash Balance Plan.
- July 2003 AGM Added here April 2004. Quote - "The Board did obtain a legal Opinion from
an independent Attorney from Werksmans, and a Senior Legal Counsel Advocate
Gauntlett, confirming that IBM had no authority to Veto the approval of
pension increases by the Board of Trustees."
Newsletter 19 Feb 2004 Quote - "Any
Fund action can only be taken if it is agreed to by the Board of Trustees.
However, just prior to the election of member trustees, IBM’s appointed trustees
changed the Rules to restrict any effective voting procedure and block any
deadlock-breaking mechanism. Anything objectionable to IBM is stopped at Board
level through block voting by Appointed Trustees. Beyond that, IBM also embedded
in the Rules a right of veto in every area of consequence to the Fund: finances,
benefits, Rule changes etc. Nothing happens unless IBM says it can. Trustees are
- South African Pensions in
general - Summary by a solicitor.
- Newsletter Number 12 - news from South Africa, December 2001
- He has conquered a giant - From Sunday Times Metro 2 December
- South African retirees to get their share of
surplus by right - articles from Personal Finance, 24 November 2001
- Immoral or Illegal?
articles from Personal Finance, 10 November 2001
A slice of surplus cake for everyone - Progress on Legislation
Ups and downs in surplus jungle - news about the Pensions Fund Draft Bill from "Personal Finance Magazine", 2 September 2001
- Govt consulted over surpluses Item from Saturday Star, 31 March 2001
- The Law is largely to Blame Letter to Financial Mail, 9 March 2001
- Even sand is at risk Letter to Financial Mail, 9 March 2001
- The South African Pension Fund Scandal Letter to The Sowetan, 6 March 2001
- Preliminary comment on the proposed legislation for the apportionment of surpluses (78K)
- Pension Funds Second Amendment Bill 2001 (560K)
THE BATTLE HOTS UP - Financial Mail, 2nd March 2001
The draft Pensions Fund Bill
Swords crossed over workers' pension losses by Ann Crotty, Business Report 27/02/01
- Letter from Elected Trustees - January 2001
- All IBM pension fund trustees need to account to members
- Newsletter No 9. - good explanation but lengthy
- South African Resolution for the Shareholders Meeting 2001
- IBM Pensioners in South Africa lodge Complaint
Strip away pensions' veneer to find ugly face of capitalism
from "Business Report" - South Africa
- Mistakes, recalcitrance, bureaucracy E and pensioners
- from Business Report (South Africa). By David Gleason
For links to other sites see the links page.