1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

ProposalsProposals

� SALGA’S Proposals (1st July 2005)

� Unicity proposals (25 May, date to be determined)

� Municipal Employee Bill (June)

� New Pension Act (2007 / 2008)

1 June 2005

Cape Joint Pension Fund Cape Joint Pension Fund

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

� Process of Accreditation

� Criteria

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

AccreditationAccreditation

� Locus standi of SALGA?

� Cost ? - Non-accreditation- Communication- Transfer of membership

� Investment strategy?

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

SALGASALGA’’ss proposalsproposals� Leverage LG Pension Fund Assets for Local Government

Development

� SALGA’s appoints 50% of members of the Board of Trustees

� Fund to amend its rules to become a DC Pension Fund

� All Funds may apply for interim accreditation and thereafter final accreditation

� Funds will eventually be merged as one National Fund and ultimately be amalgamated with the Government EmployeesPension Fund.

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

� Retrenchment Rule must be deleted

� Employer contributions – 15%

� SALGA can terminate fund on notice

� No smoothing of investment returns

1 June 2005

Cape Joint Pension FundCape Joint Pension FundCity of Cape TownCity of Cape Town

“City intends with effect from a reasonable date still to bedetermined, to participate only in a retirement fund with the following characteristics:-

� Define contributions pension fund

� Term of conditions of service (retrenchment benefits) must be removedfrom the rules of the fund

� Remove from rules …. any benefits or rights that create contingent liabilities for the City

� Contributions rate reduce to 15% ….and thereafter ….collective bargaining process

City of Cape Town : Letters May 2005City of Cape Town : Letters May 2005

� Accrued benefits

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

The Municipal Employee BillThe Municipal Employee Bill

Section 25 : Discontinuance of previous funds

u A previous fund shall be discontinued with effectfrom a date determined in respect of that fund by the Minister

v All Assets, including any right to claim any amount ………shallwith effect from the date pass to and vest in the Fund. (LGPF)\

Legal implicationsLegal implications

(A) Role of Board of Trustees

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

(B) LRA / Service conditions / Collective Bargaining

(C) (i) Constitution of SA

(ii) New Pension Funds Act

Origin of Benefit / RetrenchmentOrigin of Benefit / Retrenchment

� Ordinance No 15 of 1943� Ordinance No 23 of 1969� Groenewald v Cradock Municipality and

1 June 2005

Cape Joint Pension FundCape Joint Pension Fund

The extent and scope : EmployerThe extent and scope : Employer’’s duty of good faiths duty of good faithHarris v AECI Pension Fund (2000 (7) BPLR 737), Woodroffe v Tongaat-Hulett Pension fund (2000) (4) BPLR 454)

(a) An employer may not exercise its powers arbitrarily;(b) An employer must not exercise its right for the purpose of forcing

members to give up accrued rights;(c) An employer should be willing to review each decision vis-a vis members

and/or its participation in a fund with regard to its merits and circum-stances and must not adopt a rigid policy regarding benefits and enhancements;

(d) An employer must not, without reason and proper cause, conduct itselfin a manner calculated or likely to destroy or seriously damage the rela-tionship of confidence or trust between the employer and employees and

(e) An employer, when exercising as power, may look after its own interest,financial or otherwise in the future of the fund.