South Africa. GEPF: Focus should be on pensions not politics – Solidarity
Trade union Solidarity today expressed concern over the concentrated investment policy the Public Investment Corporation (PIC) is following when it comes to managing the funds in the Government Employees Pension Fund (GEPF).
Morné Malan, a researcher at the Solidarity Research Institute, explains that the PIC’s increasing focus on development at the expense of capital growth could have dangerous consequences for members in the future. “It is outrageous that the PIC considers it appropriate to keep Eskom as its second largest investment, and that other ailing state-owned enterprises constitute 30% of its portfolio, while there are so many other potential investments that can offer a higher return with a much lower risk,” Malan said.
Unlike other pension funds, the GEPF is not subject to Regulation 28 of the Pension Funds Act , and the PIC therefore has the freedom to diversify much more offshore than other pension funds can. It nevertheless appears as if only 5% of the PIC’s funds are invested abroad, while a further 5% is invested in the rest of Africa. “Given that South Africa is currently growing at a much slower rate than most other countries in the world, especially in comparison with other emerging economies, one can hardly justify such an allocation purely on investment criteria.
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