While the benefits owed to pensioners are guaranteed by the state, which is something at least, pension payments aren’t the only way in which Post Office staff are getting the short end of the stick.
As if the slow puncture at state-owned enterprises isn’t emphatic enough, it now turns out that the SA Post Office has failed to pay what it owes in pension contributions for its staff. This comes after GroundUp reported that while the Post Office had been deducting pension contributions from staff salaries, it hadn’t paid this over to the fund since May 2020.
The fund’s principal officer, Mike Faasen, told Today’s Trustee that the fund sent a letter of demand to the Post Office in February, demanding it pay what it owes. While the Post Office has actually paid most of the death and disability benefits for members, and paid the fund’s expenses, it hasn’t paid its share of the pension contributions towards retirement.
“Every effort has, and is being made to recover unpaid employer and employee contributions,” he says.
Though Faasen wouldn’t say how much is owed, the Post Office’s 2022 annual report put its “retirement benefit obligation” liability at R1,01bn. This accords with the calculations from GroundUp, which calculated the outstanding pension payments at R1bn.
This revelation assumes greater importance since on June 1st, the Post Office has a date with destiny in the North Gauteng High Court in Pretoria, where it will argue why it shouldn’t be placed in final liquidation. It was put in provisional liquidation in February, at the request of one creditor, Bay City Trading 457, which had rented premises to the Post Office in Mooinooi, in the North West, but hadn’t been paid for years.
Bay City’s efforts to extract the R278 368 it is owed mirrors the frustration experienced by the retirement fund, which dragged the Post Office to court three years ago.
Finally, in December 2021, the Supreme Court of Appeal lashed the Post Office for failing to pay pensions contributions over to the fund since May 2020. Judge Clive Plasket said that even though it’s obliged to pay pension money over to the fund every month, the Post Office tried to “place itself above the law”, and infringed the rights of its staff.
Remarkably, the Post Office raised three main arguments why it couldn’t make pension fund payments:
- first, that the retirement fund’s rules don’t oblige it to;
- second, that it could decide not to pay the fund;
- and third, that its “parlous financial state rendered it impossible to pay the fund”.
Plasket rejected these arguments as “opportunistic” and “cynical”.
“Instead of facing up to its financial challenges, as it initially did, and dealing with the fund openly and honestly, it changed tack and sought to vilify the fund for seeking to protect the rights of its members, as its board was duty-bound to do,” he said,
But rather than accepting that rebuke, however, the Post Office instead tried to appeal that ruling to the Constitutional Court — an attempt which failed.
Unfortunately, pension payments aren’t the only way in which Post Office staff are getting the short end of the stick. Early in May, communications minister Mondli Gungubele revealed in Parliament that the Post Office owes R561,7m in outstanding medical aid contributions to Medipos, even though these payments had been deducted from staff payslips.
As the DA’s Natasha Mazzone pointed out, this means that thousands of Post Office staff — of which 1740 are pensioners — may be left without proper medical cover in the event of an emergency.
This is because, at some point in every month since October 2022, the medical aid membership had been suspended. “Worryingly, this is only the historical debt, meaning that this does not even include the current monthly payments that need to be made to maintain cover.”
The Post Office’s apparent inability, or unwillingness, to pay its debts, as well as its suppliers, won’t work in its favour when it goes back to the High Court in June.
Presciently, in that December 2021 Supreme Court case, Plasket suggested liquidation is something the Post Office’s board should have considered long ago, if it hadn’t been able to pay what it owed. “An organ of state ought not to act in this way … if it is trading in insolvent circumstances, its board’s obligation is to place it in liquidation, not to pick and choose which of its debts to honour,” he said.
Gungubele has said the state will fight every effort to have the Post Office placed in final liquidation, however. Though its finances suggest a company in deep trouble — last year, it made a R2,18bn loss, and its liabilities exceeded its assets by R4.08bn — the backing of National Treasury makes all the difference.
On this front, there is at least good news for the 11 474 members of the fund, even if the court does decide to place the Post Office in final liquidation. This is because the benefits owed to the pensioners are guaranteed by the state, in terms of the Post Office Act of 1958. Which is something, at least.