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Fri Jul 01 22:37:59 CAT 2016

Nene saved thousands from crippling debt

Graeme Hosken | 04 January, 2016 00:06
In response to parliamentary questions put by the Freedom Front Plus late last year, Nene said the principle was being reconsidered. File photo
Image by: GCIS

Fired finance minister Nhlanhla Nene saved thousands of divorced government employees from crippling debt and bankruptcy in one of his last acts before his dismissal.

The trustees of the Government Employee Pension Fund have, since 2012, plunged thousands of nurses, teachers, police officers, soldiers and emergency workers into debt with their adoption of their "clean-break principle".

The principle, which the fund has admitted is prejudicial to its members, gives former spouses access to a portion of the pension of the fund member as determined by a court.

Before 2007 that amount could be accessed only after a pension fund member had retired. The principle required fund members to repay, with interest, the portion of their pension given to a former spouse as if it were a loan.

In response to parliamentary questions put by the Freedom Front Plus late last year, Nene said the principle was being reconsidered.

Responding to Anton Alberts, the FF Plus's parliamentary spokesman on finance, Nene was unable to say how many divorced fund members had been affected by the introduction of the principle.

He said that although it could not be concluded that "there are negative effects due to the current application of the clean-break principal, it is acknowledged that the application confuses members and changes the nature of the withdrawal benefit.

"The [fund's] board has therefore decided to discard the current approach and is busy consulting representatives to make the necessary changes to the Government Employee Pension Fund law and rules."

Alberts said that although Nene had acknowledged that the principle had adverse effects he had avoided giving "straight answers" about its effects on members who had "loans" imposed on them.

"There is no legal principle to force a loan onto a member of the fund. The minister also avoided questions about whether [the fund] would compensate individuals for losses suffered due to these loans," Alberts said.

He said affected members could institute a claim against the fund if compensation were not be paid.

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