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Acting Public Investment Corporation (PIC) CEO Makano Mosidi said in June that the corporation’s major focus in the next five years is to move the weighting of unlisted investments from 5% (R95bn) to 25% so that jobs can be created in SA and the economy transformed. This is worrying because more than 43% of unlisted companies underperform.
The PIC’s strategic objectives for investments in unlisted companies are strongly sociopolitically based, including to “be a pioneer in the development of quality infrastructure together with excellent services for previously neglected markets such as townships and rural areas”. With this, the PIC declares itself as a political partner of government, the ANC-PIC alliance.
The Unemployment Insurance Fund and the Compensation Fund indicated at the beginning of September before the parliamentary oversight committee and in the National Council of Provinces that they will review their mandate agreement with the PIC on unlisted investments for reasons such as poor returns.
The Government Employees Pension Fund’s mandate expired in March 2021. It was renewed only a year later, shrouded in secrecy. Can the PIC still invest money in the unlisted Isibaya fund burdened with losses?
The sustainability of pension funds has become a growing concern. The Pension Fund Act for public servants requires a valuation of the fund’s financial report at least every three years. The latest report was in March 2021. The fair value of the pension fund’s assets is more than R2.041-trillion. The liability to retirees, their dependents and members still working is R1.859-trillion.
That amounts to a small surplus of R187bn. But the necessary contingency reserves required in terms of this legislation amount to R893bn. Should contingency reserves be required the deficit would be R706bn. That is worrying.
The Mpati report listed in detail improper investment practices at the PIC. Add to this the allegation that there is no urgency at the PIC to try to recover losses. The PIC is silent on well-documented, increasing losses, which is also not good for the sustainability of pension funds. Why is no action taken against the individual or company involved? Who benefits from the losses?
The PIC has a lot of explaining to do.
Joe Kleinhans, Annlin
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
LETTER: PIC alliance with ANC means more losses
Acting Public Investment Corporation (PIC) CEO Makano Mosidi said in June that the corporation’s major focus in the next five years is to move the weighting of unlisted investments from 5% (R95bn) to 25% so that jobs can be created in SA and the economy transformed. This is worrying because more than 43% of unlisted companies underperform.
The PIC’s strategic objectives for investments in unlisted companies are strongly sociopolitically based, including to “be a pioneer in the development of quality infrastructure together with excellent services for previously neglected markets such as townships and rural areas”. With this, the PIC declares itself as a political partner of government, the ANC-PIC alliance.
The Unemployment Insurance Fund and the Compensation Fund indicated at the beginning of September before the parliamentary oversight committee and in the National Council of Provinces that they will review their mandate agreement with the PIC on unlisted investments for reasons such as poor returns.
The Government Employees Pension Fund’s mandate expired in March 2021. It was renewed only a year later, shrouded in secrecy. Can the PIC still invest money in the unlisted Isibaya fund burdened with losses?
The sustainability of pension funds has become a growing concern. The Pension Fund Act for public servants requires a valuation of the fund’s financial report at least every three years. The latest report was in March 2021. The fair value of the pension fund’s assets is more than R2.041-trillion. The liability to retirees, their dependents and members still working is R1.859-trillion.
That amounts to a small surplus of R187bn. But the necessary contingency reserves required in terms of this legislation amount to R893bn. Should contingency reserves be required the deficit would be R706bn. That is worrying.
The Mpati report listed in detail improper investment practices at the PIC. Add to this the allegation that there is no urgency at the PIC to try to recover losses. The PIC is silent on well-documented, increasing losses, which is also not good for the sustainability of pension funds. Why is no action taken against the individual or company involved? Who benefits from the losses?
The PIC has a lot of explaining to do.
Joe Kleinhans, Annlin
JOIN THE DISCUSSION: Send us an email with your comments to letters@businesslive.co.za. Letters of more than 300 words will be edited for length. Anonymous correspondence will not be published. Writers should include a daytime telephone number.
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.