Govt pensioners’ money is safe… but not taxpayers’
If government has to make up for a shortfall in the Government Employees Pension Fund, the taxpayer will be on the hook, an expert says.
Image: iStock
Despite the Congress of South African Trade Unions’ (Cosatu) proposing to use government pensions to rescue Eskom, the money would remain safe, chairperson of Intellidex Stuart Theobald said.
Cosatu proposed to cut the power utility’s R450 billion debt by R250 billion, by getting aid from the Industrial Development Corporation (IDC), the Development Bank of Southern Africa, and the Public Investment Corporation (PIC).
The PIC manages over R2 trillion in investments including their biggest client, the Government Employees Pension Fund (GEPF).
“The PIC is the fund manager of the GEPF. The GEPF is the prepaid fund that allows government to meet its obligation to pensioners. If the GEPF underperforms in terms of financial returns, the pensioner is not affected in terms of the benefit because the government guarantees these benefits,” said Theobald.
But it was government that would have to make up for the shortfall, therefore placing the taxpayer on the hook, Theobald explained.
“The fund holds assets to meet estimates of future liabilities. These estimates are done by actuaries, and the government has to pay into the fund, if the amount in the fund is not sufficient to meet the actuarial liabilities.
“Any payment that government makes is coming from its general revenue fund, which is the money it collects from taxpayers.”
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