The Engineering Industries Pension Fund (EIPF) was established in 1957 and the Metal Industries Provident Fund (MIPF) in 1991. Each fund was created when representatives of prospective parties adopted constitutions and rules. Prior to the establishment of each fund, industrial council agreements were published under s 48 of the Industrial Conciliation Act 28 of 1956 (later the Labour Relations Act) providing for the collection of contributions to funds 'to be established'. The EIPF registered under the Pension Funds Act (PFA) in 1964 and operated under it for over 40 years. The MIPF registered shortly after its establishment in 1991. The employer trustees later sought declarations that both funds were exempt from the PFA under s 2(1), which excluded funds 'established in terms of' a published industrial council agreement. The Pretoria High Court granted the relief sought. The Registrar of Pension Funds appealed.
Appeal dismissed by majority (4-1). The High Court order declaring that the EIPF and MIPF are exempt from the Pension Funds Act and that their registrations are void was upheld. The first appellant (Registrar of Pension Funds) was ordered to pay costs including costs of two counsel.
A pension fund is 'established in terms of' a published industrial council agreement for purposes of s 2(1) of the Pension Funds Act if it is established pursuant to or in accordance with such an agreement, even where the fund is not directly created by the published agreement itself but rather by the subsequent adoption of a constitution and rules. The phrase 'in terms of' bears a wide meaning encompassing funds established in pursuance of published agreements that provide for the establishment of such funds. Where statutory language is capable of two interpretations, long-standing administrative interpretation by the relevant authority (here, 40-50 years of treating such funds as exempt) is a significant consideration that may tip the balance, particularly where many rights have been acquired and obligations fulfilled on the basis of that interpretation.
Howie P observed that the constitutional right to collective bargaining (s 23) supports an interpretation that allows funds established through collective bargaining processes to remain under the industrial council framework rather than being subjected to different legislation. The dissenting judgment of Heher JA extensively discussed the policy reasons for the original exemption, noting that funds established by industrial council agreements as part of the council's own operations presented practical difficulties for regulation under the PFA (such as collective bargaining amendments requiring Registrar approval), whereas independently constituted funds like the EIPF and MIPF would fit comfortably within the PFA regulatory framework. Heher JA also noted that the trustees' motivation for seeking exemption appeared to be avoidance of statutory surplus apportionment provisions. The Deputy Registrar's affidavit noted that only 5 small funds were truly established by industrial agreements, whereas many large funds similar to EIPF and MIPF (with over 1 million members) would lose all regulation if the applicants succeeded.
This case provided authoritative guidance on the scope of the exemption in s 2(1) of the Pension Funds Act for funds established under industrial council agreements. The majority's broad interpretation of 'in terms of' meant that numerous industry pension funds (representing over a million members and hundreds of billions of Rand in assets) established pursuant to collective bargaining agreements would remain outside the regulatory framework of the PFA. This had major implications for pension fund regulation, particularly regarding surplus apportionment under Chapter IV of the PFA. The case also affirmed the importance of long-standing administrative interpretation in statutory construction where language is ambiguous. The decision was effectively overruled by legislative amendment (Financial Services Laws General Amendment Act 22 of 2008) which brought such funds under the PFA. The case illustrates tension between collective bargaining autonomy and comprehensive pension fund regulation.