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FORMER SAPPI EMPLOYEES WILL NOT RECEIVE LONG AWAITED PENSION

23/12/2013 04:34:00 BY CLAUDE MAGONGO

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MBABANE - Former employees of SAPPI Usutu Pulp Company will not be receiving money from their pension fund administrator that was paid to the Swaziland Building Society.

The money was a balance to housing loans that they had made before SAPPI stopped operations.
This is according to the Managing Director of the Swaziland Building Society, Tim Nhleko.

The employees claim the balance of payment was covered by an agreement that they signed with the Metropolitan Life Insurance Company. Relating the incident, one of the representatives of the former employees, Joecking Dlamini said “During the time that the former workers at SAPPI Usutu Pulp Company were in employment, they decided to embark on a scheme in which they would be enabled to build their homes on Swazi Nation Land.”

“The scheme was designed in such a way as to provide surety because people living on Swazi Nation Land do not have title deed and as such they cannot ordinarily use their land as surety if they wish to engage in any commercial venture, any development or if they wish to get access to a bank loan.”

According to Joecking Dlamini, “They decided that they would use their pension contributions through the Usutu Pulp Company Ltd Staff Pension Fund which was later changed to the Usutu Pulp DC Provident Fund. The scheme operated such that the SAPPI Usutu Company would mandate the Alexander Forbes Financial Services - Swaziland, to be the Administrators of the fund.”

“Alexander Forbes would then submit them to the Old Mutual Life Assurance Company who would insure and invest the contributions. Key to the whole scheme was that the pension fund would be used as surety to enable employees to access loans for the construction of their houses on Swazi Nation Land from the Swaziland Building Society. The Swaziland Building Society and the above mentioned stakeholders then engaged Metropolitan Life Insurance Company to insure the loans.”

Worked

The scheme is said to have worked well until the employees were retrenched in January 2010 when SAPPI Usutu closed down the mill and ceased their operations. This is when Alexander Forbes then deducted the money owed to the Swaziland Building Society from each of the employees that had a loan with the Swaziland Building Society from the pension fund.

According to Dlamini this was contrary to the insurance policy agreement that was signed with the Metropolitan Life Insurance Company through the Swaziland Building Society, which states under the LUMP SUM TOTAL AND PERMANENT DISABILITY BENEFIT clause:

“For policies 1 and 2, in the event of the total and permanent disablement of the life assured occurring prior to the attainment of age 60 and before the expiry of the terms of the policies an amount equivalent to the death benefit shall be payable by the insurer. For the purposes thereof total and permanent disablement shall mean such incapacity which prevents the life assured from following his own occupation or any occupation for which he is or could be reasonably expected to become qualified by virtue of his knowledge, training, education, ability and experience.”

Another point of contention deals with the SURRENDER VALUE OF POLICY which states that:
“For personal and Mortgage loans only, in the event that the life assured has made payment in full to the creditor of all amounts owing under and in terms of the credit agreement, the creditor acting under and by virtue of the cession shall be entitled to surrender this policy, provide that :
Such full payment was made to the creditor at least six months prior to the expiry of the full original term of the agreement in question.
Such surrender value shall be calculated by the actuary of the insurer.

“The Swaziland Building Society never surrendered each employee’s policy to the insurer, in which event the insurer would have been compelled to pay the surrender value in terms of the policy,” says Dlamini.

Further to this, Clause number 5 of the insurance policy agreement signed with the Metropolitan Life Insurance Company that deals with CLAIMS states that:
Unless the insurer shall receive written notification within the period of grace of the happenings or any event resulting in a claim being made against this policy, the insurer shall in no case whatsoever be liable to pay any benefit. The creditor and or the life assured will duly complete such forms and give such details and assistance and furnish such proof in relation to any claims as the company at its discretion may require.”

The final axe that the former employees have to grind is with regard to the final payout document of their Provident Fund claim issued by the Administrator of the fund, Alexander Forbes. Dlamini submits that it does not appear authentic as it is written as a photocopy and has not been signed by the Administrator.
In summary therefore, the employees are stating that the Fund Administrator should not have deducted the balance owed to the Swaziland Building Society for the housing from the members of the Provident Fund. The balance should have been settled by the insurer (Metropolitan Life) as per the policy.

“That is how a Credit Life Insurance policy works. In Swaziland there is no Retrenchment Insurance policy or product. It is not possible to take a retrenchment policy in Swaziland. So that was it and it is not only with the Usutu Pulp Company that we have such policies. We provide this product for other companies as well.”