Denel planning to do away with medical benefit trust – UASA


Embattled Denel apparently wants its medical benefit trust dissolved and is envisaging changes to post-retirement medical aid benefits, a registered trade union which has numerous Denel employees as members revealed.

Abigail Moyo, United Association of SA (UASA) spokesperson, said the union was “deeply concerned” to hear of plans that will impinge on current and Denel employees reaching retirement age as well as pensioners who worked at and for various divisions and associated companies in the State-owned defence and technology conglomerate.

In a statement she indicated Denel apparently plans a court application to dissolve the Denel Medical Benefit Trust and wants to replace guaranteed post-retirement medical aid benefits with individual annuities.

“Denel’s proposal entails excess funds the trust may have after obtaining a group annuity and making provision for future expenses are paid to Denel to meet its considerable financial obligations. This may lead to a potential actuarial shortfall of funds in the trust and potentially leave retired workers who are supposed to benefit in the lurch.

“In terms of the trust Denel workers employed prior to 2002 are contractually entitled to receive post retirement subsidies in respect of their monthly medical aid contributions to the Discovery Health Medical Scheme.

“Denel is now offering an alternative arrangement to retirees with a choice of either retaining their current subsidy or accepting an individual annuity through a group annuity policy the trust will buy from an insurer to be funded by some trust assets.

“According to Denel, after securing a group annuity scheme and providing for its future expenses, the trust should have an actuarial surplus that should then be transferred to Denel,” she said adding “UASA filed an initial mandate opposing Denel’s application and is obtaining a further mandate from affected members”.

“If necessary, UASA will pursue the legal route to stop the proposed changes as dissolving the trust is not in the best interests of affected Denel pensioners.”