13 Jun 2018

PENSION BENEFITS

RESPONSE TO QUERIES ON DELTA PENSION BENEFITS

DISTINCTION BETWEEN PENSION SCHEME AND THE COMPANY

Delta Corporation Group employees contribute to self-administered occupational pension schemes which until 2002 were under Delta Pension Fund, in addition to the compulsory National Pension Scheme (NSSA). The Delta Pension Fund was split into a number of funds following the demerger of the retail and hospitality operations in 2001/2, namely Delta Beverages, Pelhams, OK Zimbabwe, MegaPak, Afdis, Quality Insurance, Food & Industrial and Zimbabwe Sun Pension Funds.

These schemes are managed by a representative Board Of Trustees (which includes employee representatives) and administered by Old Mutual Life Company in terms of rules that are registered with the Commissioner of Pensions and in compliance with the Pension and Provident Funds Act [Chapter 24:09].

The pension schemes manage the pension contributions until the employee exits the Fund on termination of employment through retirement, resignation or any other exit. In the circumstance, the employee’s accumulated savings are transferred to schemes operated by insurers or pension companies or are paid out as withdrawal benefits or commutations. The pension annuity is therefore not the responsibility of the self-administered fund or the company.

DEFINED BENEFIT SCHEME (DIVISION B)

The legacy Delta Pension Fund was predominantly a defined benefit (DB) scheme which closed to new entrants with effect from 1 January 1995 when the scheme converted to a Defined Contribution (DC) scheme. Retirees were paid a pension based on the benefit formula at the appropriate time noting that these benefits were guaranteed through insurance schemes. Any scheme shortfalls were funded by the company. Participants had an option to transfer to the DC scheme between 1995 and 1999.

DEFINED CONTRIBUTION SCHEMES – (DIVISION C)

Participants on the defined contribution scheme (DC) receive a pension that is based on the accumulated savings at time of withdrawal. The Company has no further obligations beyond the date of termination.

NATIONAL PENSION SCHEME (NSSA)

Since 1994, the compulsory National Pension Scheme NSSA was introduced, which took part of the member contributions. Member contributions are split between NSSA and the Company Scheme with NSSA taking 6% out of 22% of the total contributions. Any evaluation of the pension payouts should include both schemes.

SAVINGS DEPLETION – HYPERINFLATION

It is common cause that pension savings were depleted during hyper-inflation. This is a matter that has been investigated by Parliament and the recent Presidential Commission on Pensions. This is a matter beyond any individual company.

OLD MUTUAL DEMUTUALISATION SHARES

The Delta Pension Fund received Old Mutual Plc shares arising from the policies that it held in 1999. The shares became an investment asset of the fund. Participants on the DC schemes benefited through a specific bonus that was credited to their accumulations. The shares did not accrue to any participant as the assets of the scheme are managed in terms of the Fund rules and in compliance with the relevant pension statutes.

RECOGNITION
Both Delta and Old Mutual and indeed the pension fund trustees take cognizance of the low and inadequate pensions that are being paid out. It is noted however that the reasons are well known to all stakeholders and are beyond the capacity of the Pension Fund.

END

13 June 2018

Enquiries

Alex Makamure (DELTA CORPORATION, Company Secretary & Delta Beverages PensionbFund Principal Officer) – Tel: 883 865/ 0712 614139