Sunday Times (Johannesburg) - July 17, 2005
Julie Bain

THE Mineworkers Pension Fund (MPF) is dwindling at such a rate that in two years members' retirement payments could be severely reduced.

MPF manages the pensions of hundreds of thousands of members of the National Union of Mineworkers but now NUM members in the coal industry no longer want to support other union members in the gold sector and subsidise their pension payments.

The issue has come to the fore in this year's coal and gold sector wage negotiations.

"The coal mining industry has approached NUM with the proposal that it should have separate benefits," said Frans Barker, the chief negotiator for SA's gold companies which negotiate through the Chamber of Mines.

As HIV/Aids leads to more deaths, pension funds pay out an increasing number of death benefits rather than set monthly payments. The increased risk cost of the fund means pension fund members will receive reduced benefits when they retire.

"It [the need to restructure the pension funds] is related to HIV/Aids and that is why it is important we find a solution.

"Some HIV/Aids programmes are starting to have a positive effect. There is a time lag before this positive effect reflects on the funds," said Barker.

"We should not over emphasise the problem of HIV/Aids. Gold mining is more dangerous than coal and this must be addressed. HIV/Aids is not the only thing killing people in the industry," said NUM spokesman Moferefere Lekorotsoane.

He said the NUM coal representatives are now saying: "We can't carry you anymore [the gold industry NUM members in the MPF].

"If it looks like a good deal coal is getting and we run with that, what are we going to say to our other members?" he said.

The average rate of HIV/Aids infection in the gold industry is 24% to 25% and in the coal industry around 11% to 12%.

Diversified resources company Anglo American said recently about a quarter of its employees in southern Africa were infected with HIV/Aids.

Of the company's 145000 employees about 2200 are taking antiretrovirals (ARVs).

Thousands who need treatment have not come forward.

The company said among HIV/ Aids-infected workers who have not taken ARVs the mortality rate may be as high as 75%. For those taking ARVs the rate is 7.6%.

There are three retirement funds in the mining industry but the problem of risk costs eroding members' benefits is most prevalent in the MPF.

The other funds are the Mine Employee's Pension Fund (MEF) and the Sentinel Fund.

As part of this year's wage negotiations, NUM has demanded that an agreement be reached that allows NUM members to select which of the three funds they want to join.

NUM also wants to see retirement benefits insulated so that the cost of the risk does not eat into the retirement fund.

"The chamber's explanation is fundamentally racist. It is premised on a view that black miners do not want to be MEF and Sentinel members," said Lekorotsoane.

He said the Sentinel Fund and MEF had traditionally been pension funds for white workers and as a result were richer than the MPF.

"Our view is that we can't have retirement funds still classified almost on racial lines. If MPF is eating into the reserves it cannot be blamed on the mineworkers. It is a matter of having the right to make a choice about which fund they want to be in."

NUM has said that over time the death benefits scheme for black mineworkers, once a separate fund, became part of the Mineworkers Provident Fund, eroding the value of the retirement portion of the funds in the Provident Fund as risk cover premiums increased.

The issue of HIV/Aids hitting pension payments is a concern across a number of industries.

"Group risk costs are high and will continue to accelerate because of HIV/Aids, and this could have a major impact on the retirement benefits paid by pension schemes," says Steven Rosenberg, the head of actuarial research and development at Momentum collective benefits.

"The trustees of pension funds need to actively manage the situation to ensure the members' pensions are not eroded by escalating risk costs," he said.

Barker thinks it is inevitable there will be some restructuring of the scheme.

This week NUM declared a dispute with the chamber, which is leading wage negotiations for South Africa's biggest gold companies.

The CCMA is in the process of appointing a mediator and talks will then continue.

Lekorotsoane said the issue goes beyond the retirement fund to the fact that the companies have not implemented the job grading agreement settled in 2003.

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