File image: Former Chief Executive Officer of Eskom Holdings SOC Limited, Brian Molefe.

Parliament - The head of Eskom's pension and provident fund admitted on Friday that former Eskom CEO Brian Molefe should never have been entitled to a pension from the power utility because he was employed on a fixed five-year contract.

"He should never have been a member of the fund in the first place," Sibusiso Luthuli, CEO of the Eskom Pension and Provident Fund (EPPF), told a parliamentary inquiry into Eskom's affairs.

Under questioning from the evidence leader in the inquiry, Nthuthuzelo Vanara, Luthuli also confirmed that Eskom had created the impression that Molefe had been permanently appointed, before giving instructions that he should be granted extraordinary pension benefits at the age of 50.

"In other words you acted in good faith after an impression was created to you by Eskom that Mr Molefe was a permanent employee? ... And we know now today that such representations were not correct? In other words Eskom misrepresented the facts to the pension fund?"

Luthuli said the fund had no reason to doubt the information given to it by then Eskom chairman, Ben Ngubane, and had subsequently applied the rules of the pension fund as per usual.

Read: Brian Molefe's R30 million pension under scrutiny at Parliament

He had earlier detailed how Eskom had instructed that an additional 156 months be added to the actual 16 months Molefe spent in Eskom's employ, to allow him to retire at 50 with the same benefits he would have earned had he remained at the company until the age of 63. 

The fund was also instructed, he said, to waive all penalties, on the understanding that Eskom would reimburse the fund.

According to the fund's calculations, this should have given Molefe a pension of around R26 million but this rose to R30.1 million, for two reasons. Firstly, the fund had performed its calculations on the assumption that his salary had remained unchanged and that his spouse was five years younger than him.

It had to recalculate the sum, to factor in a salary increase and the fact that his wife was in fact "much, much younger" and that in the event of his death, the pension had to continue providing for her.

Molefe opted to take a third of the sum in cash, and to take a monthly pension from the remaining two thirds, which gave him a gross pension income of  R110 000.

Molefe left Eskom under a cloud in late 2016, after then Public Protector Thuli Madonsela implicated him in suspicious dealings between the power utility and the politically-connected Gupta family.

The board gave him back his old job at Eskom this year after Public Enterprises Minister Lynne Brown vetoed the pension payout, but a ministerial task team advised shortly afterwards that he be removed from the post after the pension and his re-appointment sparked a public outcry.

The probe by Parliament's portfolio committee on public enterprises into Eskom's affairs started this week. It was sparked in part by Madonsela's findings.