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UASA prepares to fight beleaguered arms manufacturer Denel’s medical aid proposal

Trade union UASA is preparing for a legal tussle with beleaguered state arms manufacturer Denel over the proposed dissolution of the Denel Medical Benefit Trust and the replacement of its post-retirement medical aid benefits that are guaranteed through the trust, with individual annuities. Picture: Reuters/Siphiwe Sibeko

Trade union UASA is preparing for a legal tussle with beleaguered state arms manufacturer Denel over the proposed dissolution of the Denel Medical Benefit Trust and the replacement of its post-retirement medical aid benefits that are guaranteed through the trust, with individual annuities. Picture: Reuters/Siphiwe Sibeko

Published Nov 2, 2021

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Trade union UASA is preparing for a legal tussle with beleaguered state arms manufacturer Denel over the proposed dissolution of the Denel Medical Benefit Trust and the replacement of its post-retirement medical aid benefits that are guaranteed through the trust, with individual annuities.

Denel’s proposal entails that any excess funds the trust may have after obtaining a group annuity and having made provision for its future expenses, be paid over to Denel to meet its considerable financial obligations.

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UASA said is concerned this might lead to a potential actuarial shortfall of funds in the trust and potentially leave retired workers who were supposed to benefit in the lurch.

In terms of the trust, Denel workers who were employed at the company prior to 2002 are contractually entitled to receive post retirement subsidies of their monthly medical aid contributions to the Discovery Health Medical Scheme.

Denel is now offering an alternative arrangement to retirees giving them the choice of either retaining their current subsidy or accepting an individual annuity through a group annuity policy the trust will buy from an insurer, and which will be funded by some of the trust’s assets.

"Uasa has filled an initial mandate to oppose Denel’s application and is in the process of obtaining another mandate from affected members. If necessary, UASA intends to pursue the legal route to stop the proposed changes as a dissolution of the trust will not be in the best interest of the affected Denel retires," the union said.

Denel has been unable to pay salaries for workers in full or at all since the middle of 2020 which has resulted in running battles, some of which Uasa has won in court and obtained orders to attach the utility's assets.

Denel last made a strenuous effort in September and pacified trade union Solidarity with a R4 million payment for salaries in arrears at Denel Land Systems and Denel Dynamics.

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