LETTER: GEPF flouts Pension Funds Act

Public service employees who do not belong to a union/employee association are forced by law to pay monthly membership fees in the form of agency fees to the recognised trade unions. However, union membership and benefits cease with termination of employment, such as at retirement. Pensioners are subsequently self-reliant and must depend on the responsible and sound management of their respective pension funds.

In this case, the Government Employees Pension Fund (GEPF) law applies to civil service workers and pensioners. A board of trustees is appointed/elected to safeguard membership interests and the long-term sustainability of the GEPF. There are several aspects that deserve emphasis:

The composition of the board of trustees. Though pensioners make up about 25% of the GEPF membership there is only one pensioner trustee on the board. The other members are appointed by the employer (the state) and representative unions/employee association. The destiny of public service pensioners is therefore prejudiced by a board of trustees loaded with "cadres/appointees” supporting government’s politically driven programmes. What happened to proportional representation?

Review of GEPF law. To ensure greater visibility and accountability of the GEPF towards members and pensioners, consideration should be given to the following aspects and the GEPF law amended accordingly:

• Legislation governing private pensions (the Pension Funds Act) sets five critical investment criteria: investments should be made in the best interest of the fund; prohibits an investment of more than 5% "in the business of the employer”; provides for members to elect 50% of trustees/directors by direct vote; provides for a "fit and proper” test for the CEO of the fund; and independent external control by the Registrar of Pension Funds and a pension funds advisory body
• Legislation for the state pension landscape ignores the above principles. There is no "best interest” provision, no ban on investing "in the business of the employer”, no direct election by employees of their own trustees/directors (with the exception of the single pensioner trustee), no provision for a "fit and proper” test for the CEO of the fund, and no independent external control.

The above statutory difference is direct discrimination against public servants.

SA Versfeld

Betty's Bay

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