GEPF’s obligation to invest with PIC questioned

A slew of questionable investments over the past few years by the Public Investment Corporation (PIC) of Government Employees Pension Fund (GEPF) money (Steinhof, Eskom, Ayo Technologies) has put this relationship under the spotlight at the Mpati commission of inquiry into the PIC, writes Legalbrief. The obligation of the GEPF to invest money with the PIC came under the spotlight when a pensioner advocacy group called for the GEPF to spread its funds to a greater number of asset managers, reports Business Day. The GEPF’s entire portfolio amounting to almost R1.8trn is invested through the PIC, making the state-owned asset manager the largest and most influential investor in the economy. Albert van Driel, head of advocacy group Association for Monitoring and Advocacy of Government Pensions (AmaGP), which represents thousands of government pensioners, argued before the commission that more competition for the business of the GEPF would lead to lower costs, more diversified investments and less political meddling. The report says while external fund managers, including emerging black asset managers, are contracted to run portions of the GEPF’s portfolio, they are managed and appointed by the PIC.

AmaGP has raised serious concerns about some of the investments made by the PIC. Eyewitness News quotes Van Driel as saying that the PIC doesn't seem to have a proper mandate when it chooses to invest, citing Eskom as an example. ‘... the PIC invested around about R90bn in Eskom and that is while the credit rating was down to B2. And even when everybody realised that Eskom was being misused by the Gupta family,’ he said.

The PIC board should be disbanded, according to the general secretary of the Federation of Unions of SA Dennis George. Fin24 reports that George criticised the fact that government could have the Deputy Minister of Finance appointed as the chair of the PIC. The corporation's board is appointed by the Minister of Finance in consultation with Cabinet. ‘The fact that government can appoint a chair in the form of the Deputy Minister of Finance amounts to meddling in the affairs of workers and their pensions. How the money gets invested must be a joint decision. The chair must be a neutral person,’ George said. George said the PIC could be doing more through its investment portfolio to ensure that unemployment drops and black South Africans are included in the formal economy.