Solidarity rejects plan to use workers' pensions to bailout Eskom, warns of court action | Fin24
 
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Solidarity rejects plan to use workers' pensions to bailout Eskom, warns of court action

Feb 12 2020 10:33
Sibongile Khumalo

Trade union Solidarity has threatened legal action against a proposed plan to use the pensions of government employees to cut Eskom's R450bn debt burden, saying it would be in breach of the Public Investment Corporation's mandate and must be stopped.

The union says it has started a legal process, but has not yet filed any court documents. 

This comes after the Congress of South African Trade Unions proposed a plan to create a "special purpose finance vehicle" involving what it called a social compact between government, the PIC, the Development Bank of Southern Africa and the Industrial Development Corporation to cut Eskom's debt by some R250bn. This proposal by Cosatu, which also included 26 other points to turnaround the struggling power utility, served as a basis for talks between government, business and unions. 

On Wednesday, Solidarity said it had written to the trustees of the Government Employees Pension Fund (GEPF) and the PIC to voice its concern. The PIC invests on behalf of the GEPF and some other funds. It manages over R2 trillion in assets. Earlier in the week, the GEPF said it had not been consulted about the plan. The PIC did not return a Fin24 request for comment on Tuesday. 

Solidarity said on Wednesday that any action "to use workers' pensions to save Eskom or any other state-owned enterprise would fall outside the mandate of the GEPF" and would be in breach of the contractual agreement with its members.

Solidarity CEO Dirk Hermann, stated that "it is not in the interest of the workers to fund bankrupt entities".

Hermann added that the union's plan may include obtaining a court interdict. He later stated Solidarity's main goal is not going to court but to find a solution to "this bad idea".

"Using pensioners' money to bail out Eskom will be a major mistake. Workers should not accept the controversial plan to fund Eskom from the GEPF,"  he said.

'Pension capture' 

Solidarity said on Wednesday that the proposed action amounts to "pension capture".

"Workers' pensions are not state money," said Solidarity, adding that it is not their responsibility to fund bankrupt state enterprises.

Solidarity said an announcement of the plan by President Cyril Ramaphosa during his State of the Nation Address would "have an undue influence on the mandate of the GEPF and the PIC"  likening it to putting a "political gun" to the head of the companies.

Cosatu, which is part of the ANC governing alliance, has said the proposal is aimed at preventing the collapse of Eskom and possible job losses.

The trade union federation and Business Unity South Africa had previously said they hoped a pact around Eskom's debt restructuring would be announced in Ramaphosa's State of the Nation Address on Thursday. But on Tuesday Cosatu said a pact had not yet been reached.

"We've agreed more engagements and consulting is needed for all social partners," said Matthew Parks, Cosatu's parliamentary coordinator, according to Bloomberg. "We’ve agreed to give space for the next few weeks."

solidarity  |  eskom  |  pension funds  |  bailout
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