When Allan Bruce , resigned on 18 January 1999 after working at Eskom for 12.5 years, he was given limited choice both in terms of the law and of the fund’s own rules on what he was allowed to do with his pension fund benefits that were vested with the Eskom Pension and Provident Fund .
The pension fund laws changed in 2001, which allowed people to move their money, on resignation, to a deferred fund of their choice until they retire. It was not applied retrospectively though. Before the 1990s, most pension and provident funds in South Africa were Defined Benefit Funds, and contributions paid into a DB fund were based on a calculation that does not necessarily aim to align the number of contributions with the benefit that will be paid when the member exits, but was aimed at paying out an agreed value at the age of retirement.
Benchmarked with the Allan Gray Balanced Fund, in which Bruce also holds investments, the restriction of movement does prove a hard blow. Similar to the EPPF, the Allan Gray offering is also a conservative proposition, with a long-term growth focus and is lacking in speculative positions. He says he is simply a spectator to the horror show of value destruction, which is the current investment performance and future prospects of his retirement savings housed at the EPPF. The EPPF reported an investment return of 4.5% in the financial year to June 2019.
“As a result, I have no choice but to continue working way into my golden years and making alternate arrangements for retirement,” he adds. “Other deferred members might not be able to afford this ‘luxury’”, he said.
After all is said and done - and with the markets taking a dive - there aint much left to pilfer to save ESKOM! Another one bites the dust!