Labour Wrap: Complex issues in pension fund fears

A GENERAL strike is supposed to shut down a country, says Terry Bell in his latest Labour Wrap. The one called on Wednesday by Cosatu, backed by the SA Communist Party, certainly came nowhere close to doing that. However, it did reveal that these members of the ANC-led alliance still have considerable support and organisational capacity.

But this strike was really part of the ongoing factional battles within the ANC, which will only be resolved in one way or another at the elective conference in December. Two-and-a half months is a very long time in politics, Bell remarks.

Of more immediate interest, he says, is the press conference called on Tuesday by Finance Minister Malusi Gigaba to put to rest rumours that government intends raiding state pension funds to bail out failing state-owned enterprises (SOEs). But these fears were not allayed, says Bell, because there was “much to read between the lines” of what was said.

Admissions about “ongoing discussions” between government and the state-owned Public Investment Corporation (PIC) and “approaches” regarding the need to keep South African Airways airborne continue to cause concern. So, too, does the fact that Sfiso Buthelezi now chairs the PIC.

Bell notes that Buthelezi faces a slew of allegations regarding tender irregularities during his stint as head of the passenger rail agency. Yet he was appointed deputy finance minister in the controversial Cabinet reshuffle in March and, six weeks later, took over as chair of the PIC.  

However, Bell points out that two vital elements seem to have been ignored in the continuing debate about state pension funds and the government: the role of the PIC clients, and how junk status may play a part in future negotiations.

Prime among the clients, he says is the Government Employee Pension fund (GEPF) whose members probably own R1.6 trn of the R1.9trn administered by the PIC. There are an equal number of government and worker trustees who have ultimate control over how the fund is administered. Then there is the question of junk status interest rates and access to loans. 

So, the issue are more complex and nuanced than might seem at first sight. 

* Add your voice or just drop Terry a labour question. Follow Terry on twitter @telbelsa.

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