Angry workers might pull funds

CONCERN: MONEY WILL BE USED TO BAIL OUT SOES

The PIC oversees about R1.86 trillion, mainly state employees’ retirement savings.

Africa’s biggest fund manager may be dumped by a labour federation representing 230 000 SA state workers because it’s concerned that the funds of its members may be used to bail out mismanaged state-owned companies.

The Federation of Unions of South Africa (Fedusa) is considering replacing the state-owned Public Investment Corporation (PIC) with privately-owned fund managers to oversee the pension funds of the state workers, including nurses and teachers, that it represents.

“There is nothing in the law that requires the Government Employee Pension Fund to use only the PIC as an asset manager,” Fedusa General Secretary Dennis George said, referring to the GEPF, the central account for state workers’ retirement savings and the PIC’s main client.

In August, Finance Minister Malusi Gigaba told executives of the Congress of South African Trade Unions (Cosatu) that he can’t guarantee the government won’t attempt to make use of funds held by the PIC to recapitalise struggling state-owned companies and fund other projects, Business Day newspaper reported.

The step is among the options being considered by Fedusa.

A report in Johannesburg’s Star newspaper of an attempt to remove Daniel Matjila as CEO of the PIC ignited concerns that it could be drawn into the ANC’s internal battles and that its assets may be used to support struggling state companies. The PIC expressed confidence in Matjila after a special board meeting on September 15, denying there was an attempt to fire him.

The PIC oversees about R1.86 trillion, mainly state employees’ retirement savings. Its equity investments account for about 13% of the market value of the companies that trade on the JSE, it says on its website.

A less dramatic option would be to push for unions to have representatives on the boards of investment firms and have a greater say in the affairs of the GEPF, George said.

“We will occupy the space in the GEPF and bring the PIC straight to order in terms of their mandate,” he said.

The PIC hasn’t been approached by Fedusa, spokesman Deon Botha said.

“The PIC’s investments on behalf of the GEPF are done in terms of an agreed FSB-approved investment mandate, based on a detailed asset and liability study,” he said.

“The mandate outlines the asset classes, including the risk parameters within which these investments can be made. It is also necessary to indicate that the Investment Committee of the GEPF is constituted by representatives from various sectors of the economy, including labour.” – Bloomberg