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PSA adds voice to concerns over use of PIC funds to bail out SAA

Sep 22 2017 11:52
Fin24 and Sam Mkokeli, Bloomberg

Johannesburg - The Public Servants Association (PSA) has become the latest union to express concern over the possibility that the government could use workers' pension funds to bail out South African Airways (SAA).

In a statement on Friday, the union said it was disappointed with the Government Employees Pension Fund's (GEPF's) response to media reports that the government is considering using pension funds invested in the Public Investment Corporation (PIC) to recapitalise the loss-making airline, which is in dire financial straits.

The PSA said it wanted the GEPF to repudiate "ongoing rumours" and give confirmation that its board is not considering any financial assistance to SAA.

In response, the GEPF said it has already indicated that a "bail-out" for SAA is not under consideration, and that its position on the matter has not changed. "The GEPF indicated that the fund is not invested in SAA and, to date, has not been approached to do so," it said.

However, the PSA said it is not satisfied with the GEPF's assurances that workers' pension funds would be invested prudently, and that the fund "constantly monitors and evaluates the PIC’s performance in accordance with its investment policy and mandates".

Said PSA general manager Ivan Fredericks: “The limits and/or characteristics were not stated. It is clear from the response that the GEPF does not have much control over the type of investments that the PIC chooses, and therefore cannot provide reassurance about members’ investments.”

The PSA said it is awaiting Finance Minister Malusi Gigaba's response to its request for him "to clear the rumours to avert panic".

"The union reserves its rights while considering options to stop any public servants’ pension fund money being wasted into SAA,” said Fredericks.

This comes as Africa’s biggest fund manager could be dumped by a union representing 230 000 South African 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 earlier said it is considering replacing the 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 by phone on Thursday.

In August, Gigaba told trade union federation 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, without saying how it obtained the information. The Treasury is seeking funds to rescue SAA.

The step is among the options being considered by Fedusa, which represents about 500 000 employees in total including members of the PSA.

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


fedusa  |  saa  |  pic  |  labour  |  unions
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