THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case number: 349/07
Reportable

In the matter between:

EDCON PENSION FUND

APPELLANT

and

THE FINANCIAL SERVICES BOARD
OF APPEAL
FIRST RESPONDENT

THE DEPUTY REGISTRAR OF
PENSION FUNDS

SECOND RESPONDENT

CORAM:
SCOTT, FARLAM, NAVSA, MTHIYANE JJA et

MHLANTLA AJA

HEARD:
20 MAY 2008

DELIVERED:
29 MAY 2008

SUMMARY:
Pensions – whether right to bring transfer application under s 14 of
Pension Funds Act 24 of 1956 accrued to appellant before Act 39 of
2001 came into operation.

Neutral citation: This judgment may be referred to as Edcon Pension Fund v The
Fianancial Services Board of Appeal and Another (349/07) [2008]
ZASCA 65 (29 May 2008).
__________________________________________________

FARLAM JA

Introduction
[1] This is an appeal against a decision of Preller J, sitting in the Pretoria
High Court, in which he dismissed a review application against a decision of
the first respondent, the Financial Services Board of Appeal.

[2] The appellant, the Edcon Pension Fund, is a pension fund organization
registered as a pension fund in terms of the Pension Funds Act 24 of 1956, as
amended (to which I shall refer in what follows as ‘the Act’). The first appellant
is the Board of Appeal constituted in terms of s 26 of the Financial Services
Board Act 97 of 1990, which heard and dismissed an appeal from a decision
taken by the second respondent, the Deputy Registrar of Pension Funds, to
reject certain transfer applications submitted to him in terms of s 14 of the Act.
The second respondent’s decision to reject the transfer applications was
based on his view that they were incompatible with the provisions of the
Pension Funds Second Amendment Act 39 of 2001 (which I shall call in what
follows ‘the surplus legislation’).

[3] The appellant does not dispute that the transfer applications are
incompatible with the provisions of the surplus legislation but contends that it
had acquired a vested right to have the applications determined in
accordance with the provisions of the Act as they were before the surplus
legislation came into effect.

Facts
[4] Before I summarise the arguments advanced before us by the
appellant and the second respondent it is necessary to summarise the main
facts.

[5] On 7 July 1997 the fund was closed to new entrants and its members
were offered the opportunity of transferring to certain provident funds which
had been established by the employer. Thereafter the fund embarked upon an
exercise which involved a restructuring and distribution of the surplus in the
fund. This exercise, which started before the advent of the surplus legislation,
was designed and implemented in accordance with the legal position at that

time. The restructuring part of the exercise involved the transfer of members
to the provident funds and the outsourcing of the benefits payable by the fund
to pensioners. Transferring members, pensioners and certain members were
offered benefit enhancements funded out of the surplus but were required to
renounce their employer post-retirement medical aid benefits. Former
members who had already transferred to the provident funds were also
offered the opportunity of renouncing their post-retirement medical aid
benefits in exchange for an enhanced benefit. In order to match an
enhancement which former members who had already transferred to the
provident funds had received when the transfer occurred transferring
members and pensioners were also offered an additional 25 per cent
enhancement. It was thereafter envisaged that the balancing surplus would be
transferred to the Edcon Provident Fund for specified uses by the employer.

[6] In order to give effect to the restructuring certain amendments to its
rules were adopted by the fund and submitted to the Registrar’s office on 7
December 2000 for approval in terms of s 12 of the Act. The Registrar was
not happy with the amendments, primarily because they had not been
adopted pursuant to a negotiated settlement. In May 2001 at a meeting at the
Registrar’s office it was agreed that the fund would enter into a negotiated
agreement concerning the distribution of the surplus with all stakeholders and
that certain consequential amendments would be made and that the
amendments, as modified in the light of the negotiated agreement, would be
resubmitted for approval. On 14 June 2001 the negotiated agreement was
submitted to the Registrar’s office, together with further draft amended rules
for advance approval. On 18 June 2001 the Registrar’s office advised that it
could not approve rules in advance but that it could not see anything untoward
in principle in the draft rules.

[7] During August 2001 the amended rule amendments, which gave effect
to the negotiated settlement, were submitted to the Registrar’s office, together
with certificates from the actuary of the fund and the trustees stating that they
regarded the distribution as reasonable.

[8] No response regarding the amendments was received from the
Registrar’s office before 7 December 2001, when the surplus legislation came
into effect. Subsequently, in March 2002, the Registrar’s office advised the
fund that in view of the surplus legislation it was obliged to reject all
applications for rule amendments that failed to give effect to the reasonable
expectations of members and former members arising from the surplus
legislation. The fund was further advised that it had to retain a contingency
reserve sufficient to address any claims that were likely to arise as a result of
the surplus legislation. A further set of amendments was then drafted and
submitted by the fund on 6 June 2002 so as to comply with the Registrar’s
further demands. Eight days later the Registrar’s office issued a circular
stating that rule amendments and transfer applications submitted before 7
December 2001, (when, it will be remembered, the surplus legislation came
into operation), would be considered in the light of the legal position as it was
when they were submitted. Applicants whose applications were submitted
before 7 December 2001 but were rejected after that date because of non-
compliance with the surplus legislation were invited to resubmit applications.

[9] The fund responded to this invitation and to certain other advice it
received from the Registrar’s office and requested the Registrar to consider
the rule amendments it had submitted in August 2001. As a result these
amendments, which provided that they were effective from 1 September
2001, were registered. In terms of s 12 of the Act they were deemed to have
come into effect on the date stated, ie, over three months before the surplus
legislation came into operation.

[10] After the rule amendments were registered the fund implemented what
the chairman of its trustees called in the founding affidavit ‘an extensive
communication exercise’ to advise stakeholders about the rule amendments
and steps were taken to begin implementing the scheme.

[11] On or about 17 February 2003 each of the members was provided with
what was described as ‘an option’, either to remain a member of the fund or to
transfer to one of the provident funds, effective from 1 March 2003. Those

members who elected to transfer were to receive a 25 per cent enhancement
to their actuarial reserve values, but were to forfeit their entitlements to have
their post-retirement medical aid contributions, as well as other medical costs,
subsidised by the employer. 155 active members were communicated with, of
whom 29 elected to remain members of the fund, 35 did not reply (and thus
by default also remained members of the fund), 87 accepted the offer to
transfer to one of the provident funds, and there were what were described as
four ‘exits’ from the fund. Pensioners of the fund were also given options in
respect of future payments and funding of their pensions, either to remain
pensioners of the fund and thus continue to receive their monthly pension
payments from the fund and to receive their post-retirement medical aid
contribution subsidy from the employer, or to purchase annuities in their own
names with an enhancement to their pensioner liabilities of 25 per cent and to
agree to discharge their former employer from its post-retirement medical aid
contribution subsidy liability. From 1 March to 1 May 2003 560 pensioners
appear to have elected to choose the second alternative.

[12] On 4 June 2003 the fund submitted the relevant transfer applications to
the Registrar’s office for approval in terms of s 14 of the Act.

[13] On 13 August 2003 the Registrar’s office wrote a letter to Alexander
Forbes Financial Services, the fund’s consultants, stating that the Registrar
could at that stage only approve the transfer of 100 per cent of Member’s
accrued liabilities and that any surplus in the fund should be dealt with in
terms of the surplus legislation.

[14] On 14 August 2003, the chairman of the fund’s trustees sent a letter to
the Registrar’s office in which he stated that he had been informed by the
fund’s consultants of the decision to decline to approve the s 14 applications.
After expressing his concern and frustration at this outcome, given the long
and protracted negotiations and dealings the fund had entered into with the
Registrar’s office in relation to the transfer applications, he requested a formal
response from the Registrar.

[15] The second respondent’s reply to this letter was sent to the appellant
on 28 August 2003. It reads as follows:

‘Amendment No 14 to the Rules of the Edcon Pension Fund and Amendment No 1 to the
Rules of the Edcon Provident Fund were, as you state in your letter, registered by this office
on 10 September 2002, i.e. after the commencement of the Pension Funds Second
Amendment Act, 39 of 2001, on 7 December 2001.

These amendments were registered at the request of the Fund, as evidenced by an e-mail
dated 2 September 2002. A copy is attached as Annexure A. The request followed a letter
dated 28 August 2002 in which Rule Amendment 14 as submitted under cover of a letter
dated 6 June 2002, was formally rejected. In spite of this, the Registrar agreed to reconsider
registration of Amendment No 14 as submitted prior to 7 December 2001, but never formally
rejected. A copy of this letter is attached as Annexure B.

It is clear that the officials concerned did everything possible to be helpful and to comply with
the requests of the Fund.

Registration of these rule amendments did not guarantee approval of the applications
submitted thereafter in terms of section 14 of the Act. Unfortunately, in view of the
amendment of the Pension Funds Act, it was not possible to approve the subsequent transfer
applications, as these applications provided for an apportionment of surplus, after 7
December 2001, in a manner not consistent with the Act as it was not reasonable and
equitable to all stakeholders.

Whilst I appreciate that the Fund, as stated in your letter, communicated often with the
Registrar’s office and endeavoured to make full and transparent disclosure regarding the
intention, basis and consequence of the reconstruction of the Fund, the Registrar now finds
himself in the invidious position that he is not empowered to approve the section 14
applications due to the amendment of the Act with effect from 7 December 2001.

This was explained at a meeting held on 11 August 2003 at 16:30.

A letter was sent to Alexander Forbes Financial Services on 13 August 2003, informing them
that the Registrar can at this stage only approve the transfer of 100% of Member’s accrued
liabilities and that any surplus in the Fund should be dealt with in terms of the Act as
amended. This was not a formal rejection of the section 14 applications, but rather an
opportunity to amend the application and get the 100% of accrued liabilities approved.

The Registrar does not have discretionary powers in this matter. The section 14 applications

for transfer as submitted can therefore not be approved whilst the transfers include the
transfer of surplus.’

[16] On 15 September 2003, the appellant lodged an appeal to the first
respondent against the refusal to approve the transfers. In the formal reasons
furnished by the second respondent pursuant to Regulation 4 of the
Regulations issued under s 26(2) of Act 97 of 1990 the following points were
made:

(a)
the rule amendments submitted before the surplus legislation came
into operation had to be considered in accordance with the legal position then
prevailing;

(b)
by registering the amendments the Registrar did not undertake to
approve the s 14 applications;

(c)
the s 14 applications were only submitted on 4 June 2003, after the
surplus legislation came into force, and they had to be considered in
accordance with the surplus legislation; and

(d)
the benefits accruing to members were not automatically enhanced by
the registration of the amendments. ‘Enhancement would only take place on a
case by case basis if and when a member of the fund agreed to transfer to
another fund. After 7 December 2001 such ad hoc enhancement from surplus
was no longer possible.’

[17] On 7 December 2004 the first respondent handed down its written
decision dated 14 November 2004, dismissing the fund’s appeal. In its
reasons it found, inter alia, that the second respondent had not erred in
applying the provisions of the surplus legislation to the transfer applications
and (as it was put in the reasons) ‘in finding that the benefit enhancements did
not vest before 7 December 2001 . . . [and] that the transfer applications were
not reasonable and equitable to all stakeholders’.

[18] The fund then launched an application in the Pretoria High Court for an
order reviewing and setting aside the first respondent’s decision, relying on a
number of grounds set out in s 6 of the Promotion of Access to Justice Act 3
of 2000, (commonly known as ‘PAJA’), inter alia, that the decision was
materially influenced by an error of law (section 6(2)(d) of PAJA) and that the
decision was taken because relevant considerations were not taken into
account (s 6(2)(e)(iii) of PAJA).

Judgment of court a quo
[19] With the approval of counsel for the parties Preller J in the Court a quo,
approached the matter on the basis that if the case could be distinguished
from the majority judgment of this court in Chairman, Board of Tariffs and
Trade v Volkswagen of South Africa (Pty) Ltd 2001 (2) SA 372 (SCA) (which I
shall call in what follows ‘the Volkswagen decision’), the application should fail
but that if the majority decision in that case could not be distinguished then
the application had to succeed. In the result the learned judge came to the
conclusion (for reasons which will appear presently) that the Volkswagen
decision was distinguishable and he dismissed the application.

Relevant statutory provisions and summary of the Volkswagen decision
[20] Before I summarise the submissions of counsel for the appellant it will
be appropriate to set out the relevant portions of sections 12 and 14 of the Act
as well as the facts and the reasons for the majority judgment in the
Volkswagen decision.

[21] Sections 12 and 14 of the Act, as far as material, provide as follows:

’12
(1)
A registered fund may, in the manner directed by its rules, alter or rescind
any rule or make any additional rule, but no such alteration, rescission or addition shall be
valid─
(a)
if it purports to effect any right of a creditor of the fund, other than a member or
shareholder thereof; or
(b)
unless it has been approved by the registrar and registered as provided in subsection
(4).
(2)
Within 60 days from the date of passing of a resolution for the alteration or rescission

of any rule or for the adoption of any additional rule, a copy of such resolution shall be
transmitted by the principal officer to the registrar, together with the particulars prescribed by
regulation.
(3)
If any such alteration, rescission or addition may affect the financial condition of the
fund, the principal officer shall also transmit to the registrar a certificate by the valuator or, if
no valuator has been employed, a statement by the fund, as to its financial soundness, having
regard to the rates of contributions by employers and, if the fund is not in a sound financial
condition, what arrangements will be made to bring the fund in a sound financial condition.
(4)
If the registrar finds that any such alteration, rescission or addition is not inconsistent
with this Act, and is satisfied that it is financially sound, he shall register the alteration,
rescission or addition and return a copy of the resolution to the principal officer with the date
of registration endorsed thereon, and such alteration, rescission or addition, as the case may
be, shall take effect as from the date determined by the fund concerned or, if no date has
been so determined, as from the said date of registration.
. . .
(1)
No transaction involving the amalgamation of any business carried on by a
registered fund with any business carried on by any other person (irrespective of whether that
other person is or is not a registered fund), or the transfer of any business from a registered
fund to any other person, or the transfer of any business from any other person to a
registered fund shall be of any force or effect unless─
(a)
the scheme for the proposed transaction, including a copy of every actuarial or other
statement taken into account for the purposes of the scheme, has been submitted to
the registrar;
(b)
the registrar has been furnished with such additional particulars or such a special
report by a valuator, as he may deem necessary for the purposes of this subsection;
(c)
the registrar is satisfied that the scheme referred to in paragraph (a) is reasonable
and equitable and accords full recognition─

(i)
to the rights and reasonable benefit expectations of the members transferring
in terms of the rules of a fund where such rights and reasonable benefit expectations
relate to service prior to the date of transfer;

(ii)
to any additional benefits in respect of service prior to the date of transfer, the
payment of which has become established practice; and

(iii)
to the payment of minimum benefits referred to in section 14A,
and that the proposed transactions would not render any fund which is a party thereto and
which will continue to exist if the proposed transaction is completed, unable to meet the
requirements of this Act or to remain in a sound financial condition or, in the case of a fund
which is not in a sound financial condition, to attain such a condition within a period of time
deemed by the registrar to be satisfactory;
(d)
the registrar has been furnished with such evidence as he may require that the
provisions of the said scheme and the provisions, in so far as they are applicable, of

the rules of every registered fund which is a party to the transaction, have been
carried out or that adequate arrangements have been made to carry out such
provisions at such times as may be required by the said scheme;
(e)
the registrar has forwarded a certificate to the principal officer of every such fund to
the effect that all the requirements of this subsection have been satisfied.
. . .’

[22] The Volkswagen decision concerned an application for a rebate on
excise duty payable on motor vehicles manufactured in the Republic, for
which provision was made in s 75 of that Act. In terms of that section a motor
vehicle manufacturer was allowed to claim a rebate on excise duty for the
purpose of the Export Incentive Scheme for the Motor Industry (Phase VI).
The calculation of the amount of the rebate depended on the extent of the
manufacturer’s foreign currency earnings, which in turn depended on the
volume of its exports of locally manufactured vehicles and component parts.

[23] Because the rebate was subject to a ceiling a manufacturer’s earnings
above the ceiling would have been of no value to it. To cater for this a note
was enacted to the relevant rebate item in Schedule 6 to the Customs and
Excise Act, which permitted a customs and excise warehouse, such as
Volkswagen of SA (Pty) Ltd, (which I shall call ‘Volkswagen’ in what follows)
the first respondent in the case, to cede ‘any specific amount of foreign
currency earnings in respect of motor vehicles exported by such warehouse,
as specified in a certificate issued by the Director-General: Trade and
Industry, on recommendation of the Board on Tariffs and Trade, to other
customs and excise manufacturing warehouses . . ..’ The note was repealed
with effect from 1 September 1995. Prior to the repeal Volkswagen had
applied for and been granted a rebate in respect of vehicles manufactured
and exported by it. It also applied for and was granted certificates permitting
cessions of excess earnings. It was unable, however, to take advantage of the
full extent of the rebates to which it was entitled due to an erroneous method
required by the Commissioner of Customs and Excise in calculating the
surplus. After the repeal of the note Volkswagen requested permission from
the Commissioner to extract exports previously included in its quarterly
accounts and to cede them to another motor manufacturer for inclusion in its

accounts for the same quarters. It accordingly sought permission to cede,
notwithstanding the repeal of the relevant note, that part of its foreign currency
earnings which it had previously been obliged to commit to its own account
because of the Commissioner’s insistence on the employment of an
erroneous method to calculate the surplus. The Commissioner conceded the
correctness of  Volkswagen’s standpoint and granted permission for the
cession. In terms of the repealed note the cession could only take place after
the Director-General had issued the relevant certificate upon the
recommendation of the Board on Tariffs and Trade, which resolved not to
make a recommendation, as it was of the view that in doing so it would be
required to exercise powers in terms of legislation that was no longer
applicable. The majority in this court (Nienaber JA, with whom Smalberger JA
and Mthiyane AJA concurred) held that the right to approach the Board for a
recommendation in respect of the additional surplus had accrued to
Volkswagen before the note was repealed, and that the Board’s view that it
was no longer empowered to make recommendations to the Director-General
in terms of the repealed note was not correct.

Appellant’s submissions
[24] Counsel for the appellant in this case relied on the principle that an
applicant has a right to have his or her application determined in accordance
with the law as it was prior to the amendment or repeal of the law in terms of
which the application is brought where the applicant has taken sufficient steps
prior to the commencement of the amending or repealing law to assert the
right relied on. It was contended that a right to have the s 14 applications
considered in the light of the legal position as it was before the surplus
legislation came into operation accrued to the appellant in this case. It was
submitted that the fund had taken sufficient steps to satisfy the test for the
accrual of the right contended for as laid down in a series of decisions of this
court, culminating in the Volkswagen decision. The facts in that case, so it
was argued, were closely analogous to those in the present matter and there
is no legitimate basis for distinguishing between them.

[25] Counsel for the appellant also advanced an alternative contention to

the effect that the second respondent erred in finding that no vested right to a
benefit enhancement could be said to have accrued to the members before 7
December 2001. In this regard it was pointed out that the rule amendments
which were registered must be deemed to have taken effect from 1
September 2001. This was in accordance with the express wording of the rule
amendments, which specifically stated that they were to take effect on 1
September 2001, and s 12 (4) of the Act, which provides that an amendment
to existing rules may take effect ‘as from the date determined by the fund
concerned or, if no date has been so determined, as from the . . . date of
registration.’

[26] Counsel submitted further that the elections which had to be made by
members as to whether to opt for the benefit enhancements provided for in
the rule amendments must by the same fiction of law be deemed to have
been made within a period calculated to have commenced on 1 September
2001, notwithstanding that they were in fact exercised after registration of the
amended rule in September 2002. Such elections as were made by members
were, so it was argued, accordingly, for purposes of the law, deemed to have
been made prior to the commencement of the surplus legislation. Accordingly,
so the argument proceeded, the members acquired a vested right in terms of
a duly registered rule to receive payments of the enhancements therein
promised and the s 14 applications did not in these circumstances facilitate
the distribution of a surplus but catered for the payment of accrued liabilities.

Second respondent’s submissions
[27] Counsel for the second respondent submitted that Preller J had
correctly distinguished the facts of the present case from those in the
Volkswagen case. They drew attention to the fact that it took the appellant
approximately nine months, after the rule amendments were approved, to
submit the transfer applications and submitted that it was not possible to find
that if the rule amendments had been approved in August or September 2001
the transfer applications would have been submitted before 7 December
2001.

Discussion
Did the right contended for accrue?
[28] In my opinion the appellant’s contention that it had the right to have its
s 14 application considered in terms of the law as it was before 7 December
2001, because this right had accrued to it before that date cannot be upheld.
The test to be applied when an answer is sought to the question as to whether
a right has accrued appears from para 13 of Nienaber JA’s judgment in the
Volkswagen case (at 380 E):

‘A right “accrues” when all the conditions for its existence in relation to the particular
beneficiary are met.’

In my view in the present context the election by the member in respect of
whom the transfer is sought is one of the conditions which must be met before
it can be said that the right to bring s 14 application for the transfer in question
accrues. This patently did not happen until well after 7 December 2001.

[29] Counsel for the appellant endeavoured to meet this point by pointing to
the fact that in the Volkswagen case Volkswagen had sought permission, after
the repeal of the note, to cede that part of its foreign currency earnings which
previously, because of the Commissioner’s erroneous view, it had been
obliged to commit to its own account. In this regard they relied on passages in
paras 6, 14, 15 and 20 of Nienaber JA’s judgment. Preller J distinguished the
Volkswagen case essentially on the ground that what happened in that matter
was that the relevant accounts were ‘historically’ amended whereas in the
present case an entirely new application was brought by the appellant. I agree
that the Volkswagen decision is to be distinguished on this basis. While in a
formal sense it is correct to say that Volkswagen was proposing to bring a
further application to cede what was called ‘the super-surplus’ in essence
what it was doing was seeking to correct the amount of the surplus to be
ceded. This appears clearly in my view from the following paragraphs in
Nienaber JA’s judgment (at 381H-382B):

‘[16]
What VW now sought to do after the Commissioner acknowledged that not all

royalties had to be taken into account in calculating the surplus it sought permission to cede
was to rectify the pre-repeal position by seeking supplementary permission to cede what had
now been determined to be the correct amount. As such the permission sought went to the
amount rather than to the entitlement. This is not, therefore, a situation where VW, never
having applied for permission to cede its excess foreign currency earning prior to the repeal,
now seeks to do so for the first time after the event.

[17] Prior to the repeal VW had fulfilled all the requirements which in fact and in law
entitled it to approach the Board for permission to make its recommendation in respect of the
super-surplus; and from its side VW had taken all the steps realistically open to it to advance
its request for permission to effect such a cession. After the repeal it remained, as it would
have been before the repeal, a matter for consideration by the Board and the Director-
General.

[18] Seen in this light the right to approach the Board for a recommendation in respect of
the super-surplus in order that “the relevant accounts be historically amended” (see para [6]
above) accrued to VW prior to the repeal of the relevant note.’

The legal fiction point
[30] I turn now to consider the appellant’s alternative contention, viz that by
a legal fiction the members who elected to accept the enhanced benefit and to
transfer to one of the provident funds and pensioners who elected to have the
benefits payable to them by the fund outsourced must be deemed to have
made the relevant elections before 7 December 2001.

[31] In what follows I am prepared to assume, without deciding, that the
elections made by the members and pensioners must by a legal fiction be
deemed to have been made within a period calculated to have commenced
on 1 September 2001. Even if that assumption is made in favour of the
appellant, I do not think that it assists the appellant because it is not possible
to hold, as the appellant’s counsel contended, that the elections must be
deemed to have taken place within a period of three months and one week
(from 1 September to 7 December) after the notional commencement date of
the period. We know that the rule amendments were registered in September
2002 and the elections were made between 17 February and 1 March 2003.
Indeed counsel for the appellant, when pressed on the point, conceded that it
was not possible to find by when the elections would have been made if the

rule amendments had been registered on 1 September 2001. This
concession, which I am satisfied was correctly made, effectively destroys the
alternative argument.

[32] In the circumstances I am satisfied that the appeal must fail.

Order
[33] The following order is made:
The appeal is dismissed with costs, including those occasioned by the
employment of two counsel.
……………..
IG FARLAM
JUDGE OF APPEAL

CONCURRING
DG SCOTT
JA
MS NAVSA
JA
KK MTHIYANE
JA
NZ MHLANTLA
AJA
THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

29 May 2008

STATUS: Immediate

EDCON PENSION FUND V THE FINANCIAL SERVICES BOARD OF
APPEAL and another
Please note that the media summary is intended for the benefit of the media
and does not form part of the judgment of the Supreme Court of Appeal

The Supreme Court of Appeal today dismissed an appeal against a judgment
of the Pretoria High Court brought by the Edcon Pension Fund against the
Financial Services Board of Appeal and the Deputy Registrar of Pensions.

Edcon Pension Fund had amending its rules with effect from a date before the
Pension Fund Second Amendment Act came into operation.  Thereafter it
embarked on an exercise involving the restructuring and distribution of the
surplus in the fund which entailed the transfer of members to provident funds.
Transferring members were offered benefit enhancements funded out of the
surplus but were required to renounce their employer post-retirement medical
aid benefits. EDCON submitted the transfer applications after the Act had
come into operation.  As the applications did not comply with the provisions of
the Act, they were rejected by the Deputy Registrar of Pension Funds and an
appeal to the Financial Services Board of Appeal was dismissed. In the
Pretoria High Court an application for the review of the decision was
dismissed and it is against this judgment that the matter came on appeal.

The Appellant argued that it had acquired a right to have the matter dealt with
in terms of the law prior to the enactment of this Act.  The SCA rejected this
argument and held that for a right to accrue all the conditions for its existence
in relation to the benefit must be met, both in fact and in law all steps
realistically required needed to taken. In the present case in view of the fact
that the election by the members for whom transfer was sought in the
application only occurred after the enactment of the legislation, and as this
was found to be a condition which had to be met in order for the right in terms
of s 14 of the Pension Fund Act 24 of 1956 to exist, no right could have
accrued.  As the transfer application did not comply with the provisions of the
Pension Fund Second Amendment Act the appeal against the judgment was
dismissed.