Medical aid buy-out will help: Sapo

Sapo, which has announced cash flow problems, has confirmed that they are giving pensioners the once-off payment option, as “subsidising the medical aid contributions of pensioners is not financially sustainable

Sapo, which has announced cash flow problems, has confirmed that they are giving pensioners the once-off payment option, as “subsidising the medical aid contributions of pensioners is not financially sustainable

Published Feb 8, 2023

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Cape Town - The SA Post Office (Sapo) said while plans are afoot to negotiate with pensioners – former Sapo employees – for a once-off payment from the Post Office in lieu of the subsidy of their pension fund contributions, this was not reneging on the pensioners’ retirement benefits.

However, pensioners say they are not willing to negotiate yet, as the benefit has stood them in good stead, especially in their old age.

Sapo, which has announced cash flow problems, has confirmed that they are giving pensioners the once-off payment option, as “subsidising the medical aid contributions of pensioners is not financially sustainable”.

Sapo spokesperson Johan Kruger said the approach was to address their cash flow predicament.

“This is also an attempt to safeguard the pensioners, as Sapo’s situation continues to deteriorate.

“On the side of Sapo, it will assist if this liability is removed from the balance sheet.

“Over the past 11 years, the Post Office has subsidised the medical aid payments of retirees by an amount in excess of R1.3 billion.

“There are 1 691 pensioners countrywide whose medical aid payments are currently subsidised by the Post Office.

“There is no reneging on any contract. The buy-out is simply an offer by (Sapo), which if accepted, amounts to consensual change in the contract that existed between the Post Office and the pensioner at the time of retirement,” said Kruger.

He added that the model of the buy-out was similar to that of Telkom and Denel pensioners.

“In South Africa, both Denel and Telkom are among those who have implemented steps to reduce their post-retirement medical aid liability.

“As far back as 2013, Telkom offered pensioners a voluntary buy off which implied no further subsidisation from Telkom towards medical aid. This model is similar to the choice the Post Office is offering its employees.

“In 2019, Denel offered its pensioners and employees an individual annuity to replace the medical aid subsidy. Postal administrations worldwide that offered a lifelong subsidy of medical benefits have found that it is not sustainable, and are developing workable alternatives,” said Kruger.

Pensioner Lillian Botha, from Muizenberg, said she was not keen on negotiating a buy-out of her medical aid benefit.

“The subsidised benefit has helped me a lot since I became a member and is especially beneficial because I am a chronic illness patient.

“If I have to apply for a new medical aid now they won’t even consider me because of my age. I have not had to rely on state medical services, which leave much to be desired.

“I doubt that I will be inclined to accept their buy-out option,” said Botha.

Similarly, 73-year-old Abduraghman Allie said he would not want to exchange his medical aid benefits for a once-off payment.

“I have worked for them (Post Office) for most of my life, starting as a postman in my teenage years. I feel like I somewhat gave my life to Sapo, and obviously when accepting this as a retirement benefit, you expect it to be there until you are no more.

“Medical aid benefits have helped a lot in old age, as you become more aware of illnesses as you go into age, and having the benefit of a medical aid makes it much easier,” said Allie.

Unions were expected to respond in due course.

Cape Times