Shortly before going to press, Noseweek received a letter from Adamus Stemmet, spokesman for the Association for Monitoring and Advocacy of Government Pensions (AMAGP), wanting to publicly express his organisation’s thanks to the opposition MPs – those of the DA in particular – who had declared themselves willing to go to the highest court in the land to stop the government from accessing its employees’ pensions for another Eskom bailout.
The ANC’s labour ally, Cosatu, in February proposed a “special purpose vehicle” that would use monies from the Government Employees Pension Fund (GEPF) through the PIC [they obviously hadn’t yet read the Mpati Commission’s report] and other state-owned developmental institutions, to take over R250 billion of Eskom’s R450bn debt obligations.”
Please note: Cosatu did not volunteer to invest their own pension fund’s money into Eskom’s perpetually rising debt.
In a media briefing to reporters, DA MPs Natasha Mazzone, Kevin Mileham and Ghaleb Cachalia (all active members of Parliament’s Standing Committee on Finance [Scof]), said the DA, would only accept a plan to invest government pensions in Eskom if the government implemented far-reaching reforms at Eskom, including tackling governance challenges, financial leakages and an operational crisis that has resulted in repeated load shedding.
“In the interim we as the DA will make sure government doesn’t touch a cent of their employees’ pension money, until we are convinced that it is a safe and secure investment,” said Mazzone.
Stemmet’s response: “Thank you very much for your support in this matter. We really need it as we have the dangerous situation where the ANC is in control at all levels pertaining to the pension fund: the Board of Trustees, where the government (ANC) appoints half the members, and unions, six. Only two members are elected, with only one representing the 400,000-plus pensioners. At the PIC, the whole board is appointed by the government, so effectively the ANC is in control of the management of the pension fund as well as the investments made by their corporation.
“We at AMAGP have warned before that despite the rosy picture the GEPF presented to Scof on 19 February 2020 (repeated in their latest newsletter), the GEPF cannot afford the R254 billion to save Eskom, as suggested by Cosatu. A new factor affecting the GEPF is the devastating effect the COVID-19 virus is having on the JSE. Just look at what happened to Sasol shares. The sustainability of the fund is now really in jeopardy.
“The government’s guarantee for the investments in Eskom amounts to only 67%, and in any event can be regarded as non-existent. We are, therefore, inclined to ignore any promises regarding guarantees for the R254bn. The carrot of being able to have representation on Eskom’s board or the new company to be formed should not impress anybody.
“Remember what happened when the PIC appointed two directors on the board of the VBS bank? According to the Motau committee they were ringleaders in the corruption that took place.
“You are no doubt aware that almost nothing is left of the contingency reserves of the pension fund. We have pointed out before that the income from investments can no longer cover the administrative costs and present pension payments. Already 41% of monthly contributions by serving members is used for this purpose. The eventual effect is obvious.
“Despite the truly dangerous situation the GEPF is in, the ANC and Cosatu seem hell-bent on their crazy plan to save Eskom.
“Thank you once again for your support. We rely heavily on members of the opposition to safeguard our pension fund.”
Government employees and pensioners are not the only ones who need to worry about the management of their pension fund. Pension funds have generally been long regarded by the financial sector as “victim capital”. The bigger the fund, the bigger the prospects to hide their misdeeds.
As Noseweek readers would have gathered from our recent reports on the matter, Amplats pensioners, too, have reason to worry about their employer’s secretive plans to transfer their multi-billion-rand pension fund to Old Mutual’s massive “umbrella fund” over which they will have absolutely no control. More about that in our forthcoming issue.
In the meantime maybe they will find some perverse consolation in the recent words of respected financial commentator Magnus Heystek: “The other day I still read about some company promising a ‘carefree retirement’. There is no such thing. Traditional retirement strategies (equities, property and a little cash) have been gutted over the past 5-10 years. Most retirement dreams have been shattered...” – The Editor.
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