Denel confirms access to medical benefit trust funding

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Denel employees and pensioners need not fear benefits from a company medical trust are in jeopardy following a High Court ruling and a ministerial pronouncement to the effect that the beleaguered State-owned company (SOC) will receive just on a billion Rand.

Clarity around the ruling in the North Gauteng High Court came from Denel in a brief statement. Other than attribution to Denel itself, the statement does not quote acting chief executive William Hlakoane or any board member.

It reads, in part, “the High Court granted an order varying the trust deed of the Denel Medical Benefit Trust (DMBT). The court order was obtained on the application of Denel. The order is one requirement for implementation of the alternative offer in the form of individual annuities to beneficiaries”.

“The order will enable Denel to arrange individual annuities for DMBT members who accepted Denel’s offer to do so. Individual annuities provide DMBT members with enhanced benefits. The amendments ensure sufficient provision is made to continue current benefits to members who did not accept the offer. The balance of the funds will go to Denel.”

The “balance of funds” mentioned in statement was in all probability what Public Enterprises Minister Pravin Gordhan referred to last week during a Joint Standing Committee on Defence (JSCD) meeting. He said: “A High Court decision was made that funds held in a medical aid – let’s call it a trust for now – which were inaccessible to Denel, notwithstanding the fact that these were so called surplus funds. The Court decided those funds can in fact be accessed, provided the welfare and wellbeing of members still in the medical aid trust are provided for”.

A Denel pensioner, preferring anonymity, told defenceWeb the court ruling would have no financial impact on benefits members are entitled to.

“When the DMBT was originally set up a financial contribution was made by Denel and this is what the court order is returning to the company. DMBT trustees are and will take the necessary steps to inform fund members of the benefits accruing from individual annuities,” he said.

Denel’s statement informs DMBT members the amendments will ensure sufficient provision is made to continue current benefits of those who do not accept the offer.

“The balance of the funds will go to Denel,” it states in what can be seen as a reference to Gordhan’s JSCD remarks.

Gordhan said the nearly R1 billion can be used by Denel to meet obligations including tax. Previous bailouts from government went to servicing debt.

Denel will receive R3 billion this financial year from National Treasury to service government debt and does not address the R1.5 billion plus Denel owes employees and suppliers.