Pensioners to be hit hard by electricity hike

2010-02-24 14:41

The electricity price hike could have far-reaching repercussions

for pensioners, the Institute of Retirement Funds (IRF) said today.

IRF president Shantha Padaychee said the inflationary effects of

the increases would be felt in available allocations by employers to pension


They would almost certainly result in reduced capacity, which would

undermine overall contributions and wealth-building within a given fund.

The National Energy Regulator of SA (Nersa) announced today it had

approved electricity tariff hikes for Eskom of 24.8 percent for 2010, 25.8

percent for 2011 and 25.9 percent for 2012.

“Typically, employers contribute around 7.5 percent to employees’

pension funds, with employees themselves contributing a like amount,” she


“Those employer contributions, however, are not statutory and it is

entirely possible that employers will, in fact, be obliged to reduce their

contributions as the inflationary effects of the electricity price hikes hit

their bottom line.”

Padaychee said rising costs for pension funds was a serious concern

in the industry.

“The power price hike will certainly not help matter in this

respect,” she said.

“Along with lower investment returns for funds, this is a matter of

concern and perhaps an issue which government and Nersa have not taken into

account in their calculations in that fewer financially independent pension fund

members implies more burden on the state in time.”


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