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SOUTH Africa has certainly had a massive dose of time wasting and double talk over the past week as, in the name of the Jacob Zuma “transition”, a grotesque parody of parliamentary politics played itself out, literally to the 11th hour. It was a classic case of what politicians usually do when they fear facing reality or cannot deal openly with difficult questions.
But while the main feature in the JZ farce ended on Wednesday night, another similar sideshow continued and is still to be resolved. It features Finance Minister Malusi Gigaba, who has managed to stall awkward questions from the 230 000-strong PSA (Public Servants Association) since September last year.
The PSA, one of the largest unions in the country, expressed the concerns of its members about the way their pension funds were being handled by that state-owned entity, the Public Investment Corporation (PSA). The fear is that the government might see this massive fund - at nearly R2trn, the largest in Africa - as something of a convenient piggy bank.
Some evidence already exists that the PIC - sole shareholder: the government represented by M. Gigaba - may have invested billions of rand of workers’ money into assets that may not make economic sense, but may have had a political motive.
Demand for accountability and transparency
So the union demand is for accountability and transparency. The PSA wants to know how the board of the PIC was appointed and who made certain decisions, notably the controversial R5bn loan to Eskom.
The union also feels it would be wise to have worker representatives on the PIC board to provide additional oversight. To discuss these matters, the PSA requested a meeting with Gigaba.
Letters were written and, apart from acknowledgements of receipt, were ignored. After five months of such apparent stalling, the union announced that it would go to court.
Within hours, a meeting was offered: 11:30 last Monday. That put a hold on the legal action. But the ministry then cancelled the meeting, suggesting another date: March 2.
The PSA accepted, but proceeded with legal action because “we don’t know if [the meeting] will happen” or, for that matter, who will be the finance minister come March 2. But because a meeting is in the offing, the legal action cannot be regarded by the courts as urgent.
However, in a separate Promotion of Access to Information action, the union has given the PIC until Monday to provide all the details of its investment decisions, especially investments in “unlisted entities”. A battle has been joined. And the determination and anger underlying it is understandable since the whole issue revolves around pension funds.
These funds are an incredible source of wealth, holding internationally more in assets than any other single fund of any kind. Money accumulated from what is in fact deferred workers’ pay now amounts, in cash and various other assets, to at least $36trn (R432trn).
Like a number of other countries with large state and institutional employee pension funds, South Africa’s GEPF provides defined benefits. This means that workers know exactly how much they will receive when they retire; that these amounts are guaranteed and will depend on length of service level of final pay.
But such funds are invested in shares, bonds and other entities with the object of maximising the returns to the fund and, therefore, to the beneficiaries. However, markets are volatile and there can be considerable losses, such as the recent collapse of the Steinhoff share price that cost the GEPF billions of rand.
And with governments and private sector employers around the world feeling the economic pinch, it is perhaps understandable that they might cast greedy eyes on the retirement money of their employees. Or, under pressure to cut costs, might try to change the rules to reduce benefits or even remove guaranteed (defined benefit) pensions, leaving ultimate payouts “to the market”.
UK unis vote to strike
Wherever this is done or workers suspect that moves are being made against what is rightly theirs, expect a fight, even from sectors not usually regarded as militant. A classic case should erupt in Britain next Thursday, when 61 universities start a “rolling” 14-day strike.
The action is a response to a proposed change in the pension regime at 68 universities from “defined benefit” to “defined contribution”, leaving final payouts to the market. This moves all the risk away from the institutions to individual workers.
Despite labour laws that make a move toward strike action difficult, with postal ballots and a required vote turnout of more than 50%, all but seven of the universities reached the ballot threshold. And there was overwhelming support for a strike, some universities recording between 80% and 100% in favour of the action.
The lesson for authorities everywhere seems clear: any move on pensions, along with a failure to be fully transparent and accountable, will almost certainly meet with worker anger - and action.
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