Mr P J Groenewald (FF Plus) to ask the Minister of Public Enterprises:†
(1) Whether Denel has withdrawn its guarantees from the Denel Pension Fund; if so, (a) why and (b) what (i) estimated comprehensive financial benefit will Denel gain from the said withdrawal and (ii) guarantees are there for the sustainability of the Denel Pension Fund;
(2) Whether the amount was reflected in the annual report, if not, why not.
(3) Whether he will make a statement on the matter? NW2793E
(1) According to Denel, the company reached an agreement with the trustees of Denpen Fund (a defined benefits pension fund) through which Denel, as employer, withdrew from the fund and the fund became a pensioner alone fund. The process was completed within the rules of the fund, voted on by the trustees and approved by the Financial Services Board.
(a) Denel embarked on the above exercise mainly to limited exposure of pensioners to Denel and also to minimize exposure of Denel towards the fund due to capital market fluctuations and funding risk.
(a)(i) The Fund had a surplus which was distributed on a 50/50 basis between the members and Denel. Denel was allocated R463m which was recognised in the 2010/11 financial statementss. The assets underlying the actuarial surplus allocated to Denel have been transferred to the Denel Retirement (DenRet) Fund (a defined contribution fund) and are accessed by Denel through a contribution holiday over the next four years.
(ii) The assets in the Denel Pension Fund are fully hedged with AAA+ government bonds and have been matched to pension liability. In addition, a risk reserve of R1b was left in the fund to cover any contingencies. The fund is, therefore sustainable.
(2) The surplus received by Denel is R463m and has been declared in the most recent Denel Annual Report. Details are on pages 130 and 175 of Denel’s 2010/11 Annual Report.
(3) No statement will be made.