Member Update - October 2021

Member Update - October 2021

minutes Read

Dear Member/Pensioner,


In an effort to keep you updated and informed, we would like to provide the latest information on several matters relating to the Fund. We also want to thank the members and pensioners who participated in our digital engagements – those sessions were very productive and the level of engagement was noteworthy. 

The Fund also recently conducted Member Satisfaction research where members and pensioners provided feedback on their member experience. Thank you to those members who participated in the research – we will be putting together a programme to ensure that we improve our service based on your feedback.



Update on Steinhoff matter

In December 2017 Steinhoff simultaneously announced an investigation into “accounting irregularities” at the Company and the resignation of its then-CEO Markus Jooste. In subsequent announcements, Steinhoff stated that the Company’s 2017 audited results would be delayed pending further investigation, and that its 2016 consolidated financial statements would be restated. The market’s reaction to the news was immediate and severe, and the value of the Company’s shares plummeted. Steinhoff’s share value has never recovered.

The EPPF, like many other investors, was invested in Steinhoff shares. After the shares plummeted, the Fund joined a class action lawsuit in the Amsterdam District Court, represented by international lawyers BarentsKrans Attorneys, in an effort to recover some of these losses. 

Steinhoff had offered a settlement amount for investors who bought shares on the stock market, the Fund being one such investor. The offer was rejected for not being fair and equitable.   Steinhoff has recently increased its settlement offer which is currently being considered by the Fund’s external legal advisors. The proposed settlement is considered to be significantly better than the initial offer, i.e. from around 267 million Euros to about 630 million Euros, an equivalent of around R4,5 billion to about R10,7 billion.  Given the number of claimants who have come forward to participate in the settlement, the offer still needs to be considered in light of the distribution to those claimants and what it ultimately translates to for the Fund. The Fund is engaging Steinhoff through its attorneys on the proposed settlement.

In the meantime, Steinhoff is having the settlement proposal sanctioned by courts in both the Netherlands and South Africa. In the Netherlands, the proposal will be voted on by a Committee of Representation which includes a representative of the Fund’s attorneys.   In South Africa, the proposal will proceed to a vote which, if successful, will then lead to a sanctioning hearing before the High Court.

The value destroyed in the Steinhoff share collapse was close to R250 billion for the whole market, and about R1.5 billion for the Eskom Pension and Provident Fund (EPPF). The EPPF participated in a first of its kind shareholder class action suit in South Africa as a means to hold management to account for losses caused. Our role as an active shareholder has resulted in R10.7 billion settlement. This shareholder activism shows a maturity in the South African market as custodians of people’s pensions do more to hold managers to account. However, the details on the settlement amounts are still not clear and parties are still negotiating these aspects.   The full details of the settlement will only be available when the process is complete, but it is also important to note that there are confidentiality issues around disclosing the exact details of the settlement.

While the Fund was negatively impacted, the loss was not too severe when compared to the equity benchmark. Our investment in Steinhoff represented only about 1.2% of our total assets in December 2017. The Fund is well-diversified and has enough assets to meet its liabilities as reflected by our 135% funding ratio as at 30 June 2020. 

We are staying close to the matter and will ensure that the interests of the Fund, and of our members, are protected.


Getting income from two sources – what you need to know for tax purposes

The South African tax system is based on the principle of adding together all the sources of income of a taxpayer into a single sum. A progressive tax rate system means that the more income is earned, the higher the marginal tax rate and the more tax is paid on assessment. By deducting PAYE every month, an employer or pension fund assists a taxpayer to pay his or her tax liability, determined on assessment, in advance. 

When only one employer or pension fund is involved, the total PAYE deducted monthly should be equal to the tax liability on assessment. Typically, this should result in no extra tax due on assessment-but where more than one employer and pension fund are involved, an additional amount of tax may need to be paid. 

Taxpayers receiving a salary or pension may make a written request to one or more employers and pension funds to deduct additional monthly PAYE. In this way, a taxpayer is able to reduce the additional amount of tax payable when the annual income tax return is assessed. A provisional taxpayer may instead pay a higher amount of provisional tax. 

The first involves applying a single percentage at which PAYE should be deducted by all employers and pension funds. The second option is to increase the amount of PAYE deducted by one or more employers or pension funds, but this is slightly more complex to calculate. 

Below is an example of how the combined taxable income is calculated in the case of a taxpayer who is over the age of 65 years and receives a salary of R270 000 and a pension of R150 000 during the tax year.

 Salary (R)Pension (R)Assessment (R)
Taxable income

270 000

150 000

420 000

Normal tax payable

28 577

2 673

71 687

Less: Tax paid in the form of PAYE withheld by employer and pension fund

28 577

2 673

31 250

Additional amount of tax to be paid on assessment



40 437


For more information on how tax is applied when you have more than one source of income, click here



Eskom Pension and Provident Fund

Please rotate your device