The United National Transport Union (UNTU) would like to update its members on the latest methods under consideration of a Task Team of all stakeholders to make proposals to allow members to loan from their pension fund investment at the Transnet Retirement Fund (TRF).
Hendrik Fourie, President of UNTU who serves on the Board of Trustees of the TRF, says the Union will leave no stone unturned to ensure that all options proposed by its members are investigated and considered.
“UNTU supports any legitimate and legal amendments to existing legislations that will relieve the financial burden of its members,” says Fourie.
The methods currently under review of the Task Team to allow the TRF to assist its members when they apply for housing loans are:
- The TRF will consider the members housing loan and establish if the member has sufficient savings in the TRF to repay the loan balance. The loan amount would be limited to the net-of-tax benefit that the member would receive on resignation at the time the loan is made.
“This housing loan facility would mainly benefit longer-serving members with significant savings in the Fund – it would not benefit new joiners. The financial risk remains with the member taking the loan and not with the TRF,” says Fourie.
- The second method is a pension backed surety given by the TRF to the Bank. To achieve this the TRF will enter into an agreement with one of the large Banks. The member will apply to the Bank for a loan for housing purposes (including home improvements or renovations).
The surety of the TRF will support the members application stating that the Fund is willing to provide a guarantee. The Bank will then assess the loan application and, if it is satisfied that the member is able to finance the loan repayments, will then approve the loan subject to receipt of the surety ship from the TRF.
“The Bank will insist that loan repayments are made by salary deduction, and paid to the Bank by the employer,” says Fourie.
- The Task Team will prepare an overview of direct lending of housing loans by the TRF to the member. The repayments will have to be made in monthly instalments deducted from the salary of the member by the employer.
“The member taking the loan would sign a loan agreement with the TRF. The loan is again secured against the member’s savings in the TRF – the member is borrowing from his / her accumulated savings.”
According to Fourie the Rules of the TRF will have to be amended to provide for direct lending. The TRF will have to register as a credit provider under the National Credit Act, and as such will have to comply with the provisions of the Act.
These include periodic reporting to the credit regulator, and compliance with the requirements relating to new loans. As the credit provider the TRF must have a process to ensure that the borrower’s ability to repay the loan is accurately assessed before the TRF approves the loan.
- Several UNTU members indicated that they would want to make withdrawals from their TRF reserves to payoff personal debt. Fourie says the TRF is governed by the Transnet Retirement Fund Act and does not currently allow reserves to be withdrawn from the fund by contributing members.
“There are a lot of legal provisions that the TRF will have to adhere to before it can apply to Parliament to make amendments to the Transnet Retirement Fund Act to allow Transnet employees to make loans and/or do withdrawals against their pension fund.
“The fund will have to apply to be registered as a deposit taking institution with the Financial Sector Conduct Authority (FSCA) to adhere to the provisions of the Banking Act,” says Fourie.
For more clarity about the work of the Task Team, please contact any of the following UNTU Representatives:-
President: Hendrik Fourie – 083 283 7482 or e-mail email@example.com
Vice-President: Trevor Wasserfall – 071 362 6219 or email firstname.lastname@example.org
Executive Councillor: Wielligh Meyer – 063 687 3661 or email email@example.com
FTUR: Luvuyo Mdyogolo – 071 363 6988 / 062 009 2142
or e-mail Luvuyo.Mdyogolo@transnet.net
UNTU will continue to keep its members abreast of any developments on this matter.
S Carstens: Media, Liaison and Communication Officer
o. b. o SA Harris