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High court ruling on former Eskom GCEO pension pay-out case

08 February, 2018

The Eskom Pension and Provident Fund (“EPPF” or “the Fund”) was cited as the 5th Respondent in a matter brought by Solidarity against Eskom. The 21 Respondents in the matter, among others, included Mr Molefe, Eskom Holdings SOC Ltd as well as Board Members of Eskom. The application sought for the court to declare as invalid and unconstitutional, the following decisions:

  • The decision of the Board of Eskom to approve a “pension carve out” for Mr Molefe which according to the application, sought to grant Mr Molefe early retirement benefits which are significantly higher than he would otherwise had been entitled to in terms of the EPPF Rules;
  • The decision of the Eskom Board to accept Mr Molefe’s early retirement proposal; and
  • The decision of the Eskom Board to reinstate Mr Molefe.

The Fund did not oppose the application, but filed an answering affidavit in order to place the Fund’s version before the court to enable the court to make an informed decision. The Fund also filed a counter application requesting the court to, in the event that the application by Solidarity was successful, order Mr Molefe to repay all amounts paid to him by the Fund. Mr Molefe opposed the Fund’s counter application.

The application by Solidarity, which had been consolidated with applications by the EFF and DA, was heard by the court on 29 November 2017.

On 25 January 2018, the High Court in Pretoria ruled on the Brian Molefe case. The ruling stated that the “early retirement agreement” reached between Mr Molefe and the Eskom Board was unlawful and should be set aside.

The aforementioned judgment stipulates that Mr Molefe needs to repay all amounts paid to him by the Fund within 10 days. In addition, Mr Molefe was also ordered to pay the legal costs of the applicants in the matter. The Fund, through its attorneys in the matter, will be seeking payment in terms of the order.

In a recent development, Mr Molefe has applied for leave to appeal the North Gauteng High Court judgment with regards to the pension pay-out. As such, the Fund will await the outcome of this appeal prior to taking further legal action.

We are aware that the judgment makes reference to the way the Fund applied the Rules (namely Rules 21, 24 and 28). The Fund has been engaged in a process of reviewing its Rules through ongoing consultation with its legal advisors and will consider possible amendments to Rules 21, 24 and 28 to avoid any future interpretation or application concerns.

We want to reiterate that the Fund would not, and has not, wilfully done anything that would jeopardise the financial soundness of the Fund and therefore, our member benefits. Our main objective is to ensure that we are able to honour all promised benefits to members, pensioners and their beneficiaries.

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