Post Office workers fear for their pensions

Each month, the Post Office deducts 7.5% of workers’ salaries as a contribution to the Post Office Retirement Fund. The employer’s contribution is supposed to be 13.55% of each worker’s salary. But for three years, neither amount has been paid in by the SA Post Office.

The last time the workers’ contributions were paid into the retirement fund was at the end of April 2020, despite a Supreme Court of Appeal (SCA) judgment delivered on 31 December 2021 ordering the Post Office to pay the retirement fund arrears, as well as 9.75% interest on the outstanding amount, within five days of the order.

“The contributions paid by Sapo to the fund prior to May 2020 comprises members’ contributions of 7.5% of each employee’s pensionable monthly salary, employer contributions of 13.55% of each employee’s pensionable monthly salary and an additional voluntary contribution,” the court said.

“It is not in dispute that Sapo did not pay these contributions to the fund at the end of May and June 2020. It ought to have paid a total contribution of R40m in respect of each month. It would appear that Sapo has not paid any further contributions to the fund since.”

Neither those outstanding contributions, nor contributions accumulated since, had been paid by the time the first of two provisional liquidation orders were granted against Sapo on February 9 even though the National Treasury approved a R2.4bn allocation to Sapo this year to help it implement a new turnaround plan.

The Post Office Retirement Fund, to which employees are obliged to contribute, is a defined contribution fund, which means contributions are set, not the benefits. The money in the fund is invested and the amount employees get on retirement depends on their contributions, the employer’s contributions and the growth in the fund.

The SCA judgment came after the retirement fund had taken Sapo to the North Gauteng High Court in July 2020, after the funds had not been paid for two consecutive months. The court ruled in Sapo’s favour, but the retirement fund appealed, and won in the SCA.

Retirement Fund principal officer Mike Faasen said Sapo had appealed to the Constitutional Court, but its application had been refused.

“So we did what we had to do,” said Faasen, which was to write a letter of demand to Sapo. He said discussions on how payment would be made had stopped in February when the provisional liquidation ruling was made by the North Gauteng High Court.

How much?

When asked how much the Post Office owes the retirement fund, department of communications and Digital Technologies spokesperson, Frans Mthombeni, said queries should be referred to the Post Office.

Sapo spokesperson Suzie Khumalo said the state-owned company wouldn’t at provide any information about its debt as “it will jeopardise court proceedings”. The first of two liquidation hearings is set for June 1.

Faasen said he could not provide the figure if Sapo declined. Liquidator Anton Shaban from Kaap Vaal Trust said the pension fund did not fall under his remit.

Based on the SCA’s finding that Sapo owed the retirement fund R40m a month in early 2020, over three years the shortfall would amount to R1.44bn. But more than 3,000 staff have left since then. There were 15,836 staff at March 31 2021, according to the latest annual report. In an interview with 702 Radio on February 15, CEO Nomkhita Mona said there were then 12,513 permanent employees.

It seems likely that Sapo owes the retirement fund about R1bn. The group’s most recent annual report lists a “retirement benefit obligation” of R876m at March 31 2022.

For some time Sapo didn’t pay Unemployment Insurance Fund or medical aid contributions either, as Parliament’s Public Enterprises and Communication Committee was told on 2 November last year. Communications and Digital Technologies Minister Mondli Gungubele said in parliament earlier this year that Sapo owed R561.6m in unpaid medical aid contributions, and medical aid had been suspended for periods over the last three years. This suspension had since been lifted.

Pensions at risk

The failure to pay amounts deducted from worker’s salaries could affect workers’ pension benefits if the Post Office is liquidated.

A manager at a Cape Town post office, who is not identified because she isn’t authorised to speak to media, said R1,050 was deducted from her salary for her pension every month. Over three years, that amounts to R37,800. Combined with the employer’s contribution of 13.55%, she will have been short-changed R106,092 over the past three years, without taking into account any interest or growth in the pension fund.

The Post Office Retirement Fund rules state that the fund beneficiaries are “deferred creditors”. In the case of liquidation, their claim “in their capacity as beneficiaries shall not be met until the claims of ordinary creditors have been paid”.

Sapo’s 2022 financial statements show its total liabilities exceed total assets by R4bn.

The uncertainty is taking its toll among staff. A worker in Cape Town said he and his colleagues were “going crazy. We don’t know where we are standing”. 

He said his medical aid had been sorted out but the pension fund was “standing still”, even as pension fund contributions were still deducted from his salary. No communication had been received from his employer on the resumption of pension fund payments or how the matter would be resolved.

“At work, mentally, physically, we are totally exhausted,” he said. As a breadwinner supporting four people, he said he was already struggling to pay all the bills due to salary cuts.

If the Post Office is liquidated he doesn’t know if he’ll get his pension fund contributions back. And he doesn’t know how or where he will find work.

“If a matriculant can’t get a job, how is a 45-year-old going to find work?” 

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