Pensioner representatives are infuriated by news that legislation is being drafted which could allow employers access to full surpluses in pension funds under certain conditions.
Peter Milburn-Pyle, chief actuary at the Financial Services Board, recently told a Pension Lawyers' Association conference that a representative task group had produced a blueprint on this issue and draft legislation should be ready for comment by June.
John Visser, chairman of the Association of Retired Persons & Pensioners (ARP&P), protested in a letter to the Portfolio Committee on Finance that pensioners were not directly represented on the task group and the ARP&P was not asked its views.
The ARP&P represents about 22 000 pensioners around the country.
Mr Visser said that since the assets of pension funds legally belong to the funds and their objectives are to provide benefits for their members and beneficiaries, "it is astonishing to find that no provision is proposed for the sharing of surpluses with the parties for whom the funds are established".
The reason many pension funds are holding substantial surpluses is that for years the pensioners, who retired on 60 percent or less of their final salary, have received increases below the rate of inflation, while the bulk of the assets in the pension funds have performed well above the inflation rate.
Where a pension fund surplus has built up over the years and the question of distribution arises, the ARP&P suggests that it be split, proportionately to contributions, between the members of the fund and the employer. But if the surplus, pensions and improved benefits being paid were monitored on an ongoing basis, the dilemma of large surpluses would not arise.
Mr Visser rejected the argument that, because the employer bears the risk of underfunding in a defined benefit arrangement, it is entitled to a contribution holiday or to claim the surplus entirely. Mr Milburn-Pyle said last week that when the proposals on this issue have been drafted they will be circulated for comment to every possible interested party, including members of pension funds and the general public.