South African Section

Contents  (This page updated 21 Oct 2007)

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 increased) pension.

  -          An annuity with guaranteed inflation increase

  -          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 two.

  See the brochure.

   

• May 2006 The plan for Elected Trustees to take over is implemented.
• April 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."
• PFAG 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 powerless."
• 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

Contacts

• Rudi Goldschmidt - SA Pension Fund Action Group
• Peter Smith - C-Plan(UK) South African Representative

For links to other sites see the links page.