Denel pays salaries - but leaves out pensions

Staff at Denel were paid their salaries on Tuesday.
Staff at Denel were paid their salaries on Tuesday.

Staff at state-owned arms manufacturer Denel learned on Tuesday that the company has paid their salaries, but not their pension contributions.

In a letter sent out by the "Denel retirement fund", the fund said workers would not be able to claim benefits as monthly payments were not up to date.

It read: "Section 13A of the Pension Funds Act is unambiguous in that any employer must effect payment of members' contributions to the fund before the 7th day of the month following the month for which it is due." 

The letter sent to staff, which SowetanLIVE has seen, said: "The fund will NOT be able to process or effect payment of members' benefits, which include death in service and medical disability benefits, resignation benefits,  investment return updates and any other benefits payable."

It also said it would charge Denel interest on late payments.

Solidarity's Johan Botha also received the letter on Tuesday afternoon. He said the trade union had not yet confirmed exactly how many people were affected. 

''Denel didn't pay (pension) contributions for a large part of the group. We are still waiting for the exact numbers," he said.

On June 25, Denel group CEO Daniel du Toit said in a signed letter the company was unable to pay employees their full salaries this month.

“Due to the ongoing liquidity challenges, we are now faced with the unfortunate reality that the company is not in a position to fulfil the 100% salary obligation for June 2019.

“Employees will receive 85% of the salary obligation for June 2019,” said the letter.

Following this, minister of public enterprises Pravin Gordhan announced a "lender" had enabled the arms manufacturer to pay the rest of the staff salaries.

But on Tuesday afternoon, it became clear that none of the pension contributions for June had paid.  Pension contributions are commonly between 12- 19% of  about a salary.

The Alexander Forbes 2018 Market Watch report showed that the average pension fund contribution for the employers it represents (not Denel) is about 14.11% of an average salary.

Denel's spokesperson Pam Malinda promised to comment on Tuesday evening, but had not done so by the time of publication. This story will be updated when the comment is received.

BusinessLIVE reported in March that ratings agency Fitch had downgraded Denel’s long-term credit rating.

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