Ramaphosa confident state pensions are safe
The deputy president believes pensions are not being used to bail out struggling parastatals.
WHAT’S THE SCORE? Cyril Ramaphosa yesterday faced questions from the National Assembly about the economy and the legal status of sex workers.
Deputy President Cyril Ramaphosa told MPs during his last Q&A session before parliament goes into recess that “what one can say clearly is that GEPF [the Government Employees’ Pension Fund], which is managed by PIC [Public Investment Corporation], will always make sure that funds of contributors are safe and well managed”.
Ramaphosa was answering a question posed by DA MP and shadow minister of public enterprises Natasha Mazzone concerning the likelihood of the GEPF “bailing out” more ailing state-owned entities.
The PIC is a fund manager on behalf of the GEPF, and Mazzone told Ramaphosa that civil servants, including MPs, were jittery that their pensions would be squandered on state-owned entities currently plagued by maladministration.
“The PIC was for some years only worth half a billion and now it is well above a trillion and more. It tells you the GEPF is managed wisely. They [the PIC] invest in a number of companies and their investment strategy has always struck me as prudent,” Ramaphosa told MPs.
He said the PIC’s investment strategy was long term and if it decided to invest money in state-owned entities, that “does not mean they are bailing them out. If they invest in Eskom, they know Eskom is a money generator and they take a long-term view. The PIC has distinguished itself as a very good fund manager.”
Reiterating that he does not share the “fear”, Ramaphosa said what gives him comfort that public servants’ pension funds are safe is because the PIC has very good corporate governance systems and it would never be in a position where it has to pay all civil servants simultaneously, as the beneficiaries reach pensionable age at different junctures.
READ MORE: Here is what we know about Deputy Finance Minister Sfiso Buthelezi
Ramaphosa further told MPs the main reason the GEPF assets could cover 120% of of pensionable obligation in 2004, as compared to the current 79% capacity, was because in the pension world the ratio of cover to obligations fluctuates.
He told MPs the minister of finance would be able to give more details.
Ramaphosa also expressed confidence in the deputy finance minister, who serves as chairperson of the PIC, saying he “has fiduciary responsibility to ensure it functions well”.
“I am satisfied with the level of governance.”
Buthelezi was recently fingered in the #GuptaEmails as allegedly being party to dodgy deals with the Gupta family.
Ramaphosa agreed with the NFP’s Shaikh Imam that GEPF pension contributors should be able to use their investments as leverage in situations where they are unable to obtain home loans from banks.
“I visited Singapore where government employees belong to a pension fund on a compulsory basis and their membership guarantees them housing because they use their pensions as collateral for housing.
“It has been in place over many years, to a point where housing in that country is one of the best and it is underpinned by the state pension. All employees, be they in the private or public sector, have to contributed to this pension fund,” said Ramaphosa.
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