1. 1 TRANSNET LIMITED TRANSNET PENSION FUND ACT AMENDMENTS October 2006

2. Table of contents Introduction Brief history of the Transnet funds Principles of the Act amendments Transnet Retirement Fund Transnet Pension Fund Conclusion

3. Introduction In April 2006 Transnet, DPE and Labour agreed: to allow SOE-type members continued membership in the Transnet Retirement Fund (“TRF”) to restructure the Transnet Pension Fund (“TPF”) into a multi-employer fund to allow continued membership of SOE- type members Act amendments are required to accommodate this The draft Act amendments have been approved by Transnet, the trustees of the three Transnet pension funds and Cabinet The draft Act amendments appeared in Government Gazette No. 29181 of 1 September 2006

4. Brief history of the Transnet funds 1990-establishment of TPF 2000-establishment of two new funds Railways and Harbours Pension Fund for non-White Employees Railways and Harbours Superannuation Fund Transnet Pension Fund  defined benefit fund + = Transnet Second Defined Benefit Fund  defined benefit fund  for all pensioners of TPF as at 2000  closed fund from 2000 Transnet Pension Fund  defined benefit fund Transnet Pension Fund (existing)  defined benefit fund  all those members who are not pensioners and who did not want to transfer to the Transnet Retirement Fund  a closed fund from 2000 Transnet Retirement Fund  defined contribution fund  for all new employees of Transnet from 2000

5. Brief history of the Transnet funds 2006-continued membership of SOE employees Transnet Pension Fund  still closed fund  still defined benefit fund Transnet Retirement Fund  still defined contribution fund Transnet Second Defined Benefit Fund  still defined benefit fund  still closed fund  enable existing members to remain members under new SOE Employer  no amendments  restructure into a multi-employer fund  establish stand-alone sub-funds  provide new governance structures

6. Principles of the ACT amendments (TRF) TRF to remain in principle a “Transnet fund” Not a multi-employer independent fund However, SOE Employers (to whom Transnet businesses have been disposed of) may also join as participating employers effectively allowing employees of SOE employers to remain members of the TRF No new employees of SOE employers to join TRF

7. Principles of the ACT amendments (TPF) TPF still one legal entity Now an independent multi-employer fund Renamed the “Transport Pension Fund” SOE-type employers (to whom Transnet businesses have been disposed of) may join as a Principal Employers (“PE”) One Sub-Fund per PE Sub-Funds automatically consist of active members Sale agreements determine allocation of Pensioner and Dependant Pensioner members to Sub-Funds The relevant liabilities, assets, rights and obligations allocated to the Sub-Fund are determined by the Trustees, the fund valuator and actuary/ies Sub-Funds have clearly defined “ring-fenced” liabilities and assets PE only guarantees its own Sub-Fund

8. Principles of the Act amendments (TPF) Principle of separation of Sub-Funds (with ability to work together) Two sets of rules General Rules control governance, allocation of costs and statutory matters. Special Rules control service, contributions and benefits. Two levels of trustees Sub-Fund Committees (“SFC’s”) manage all aspects of the Sub-Funds as determined by the Special Rules (incl. investment policy and administration of benefits and assets) Board of Trustees (“BOT”) duty to control the governance of the fund as a whole and to allocate costs where necessary

9. Illustration – old TPF structure Investment Committee Fund Administration Audit / Risk Committee Executive Committee Board of Trustees Strategic Asset Management

10. Illustration – new TPF structure Board of Trustees Investment Committee Fund Administration Audit / Risk Committee Executive Committee Sub Fund Committee Strategic Asset Management Investment Committee Fund Administration Audit / Risk Committee Executive Committee Sub Fund Committee Strategic Asset Management

11. Conclusion Act amendments critical to Transnet’s restructuring and to legitamise the continued membership of the SOE members