Want to feel better? Lets talk government pensions.

With the State Of The Nation Address (SONA 2017) now firmly planted in the annuls of history and seared into the minds of all South Africans, there is a little topic we need to broach – Government Pensions. Why you ask? Well, because I am sitting on my couch and these are the things that I think about on a regular basis, and perhaps you need a little cheering up given the madness that was SONA.

Some background: So any one who works for the ‘man’ in South Africa has probably considered a pension due to the tax efficiency of their contributions (details don’t matter here) and also because some people say its a good idea to put some dosh away for when you stop working one day. Kapeesh?

In simple terms, there are people who manage these pensions on a monthly basis and decide how best to invest your hard earned cash. They target all manner of investments to make sure they a generating enough return for their subscribers/investors/men/women in-the-street. If you work in government the same applies. They also have pensions and hopes and dreams, potentially. There is no difference in the mechanics. The South African Government Employees Pension Fund (GEPF) is Africa’s largest pension fund. They have more than 1.2 million active members and around 400,000 pensioners who receive their pension on a monthly basis, just like a salary, but for old people.

Lets talk for a moment WHERE and with whom, the GEPF invests its cash. Its main investment vehicle is the Public Investment Corporation (PIC) these guys and gals are wholly owned by the South African Government.

Their top five clients are:

– The Government Employees Pension Fund (GEPF)

– The Unemployment Insurance Fund (UIF)

– The Associated Institutions Pension Fund (AIPF)

– The Compensation Commissioner: Pension Fund (CCPF)

– Compensation Commissioner Fund (CC).

Source: http://www.pic.gov.za/index.php/about-us/

See GEPF there? Ok good. Now lets break down WHAT they invest in for their pension clients – remember those government employees…….? Well, the Chairperson of the board of trustees of the Government Employees Pension Fund (GEPF), Arthur Moloto, confirmed it held roughly 50% of Sanral bonds valued at around R15.7bn, Source: Beeld. And we all can speculate how that one is going. So I looked a little deeper at that little gold mine:

Unpaid accounts stood at R7.2-billion at the end of March 2016, with the largest single unpaid bill topping R35-million, and three million road users remain in arrears. Collections are supremely low, and in one month the entire e-toll collection did not match the average R54-million a month paid to the company that operates the tolling. Sanral’s revenue shortfalls have seen its debt rocket from R6.2-billion in 2007 to R36.7-billion in 2015. Source: http://www.nra.co.za/content/4558_SANRAL_Annual%20Report%202016_email.pdf

Get the picture? I would be as cross as a snake if I knew I have some of my yacht dosh rolled up into the violet gantries that are almost falling apart. Let me reiterate, Etoll has never made a profit. What looked like such an brilliant investment on paper for the Government Employees has turned out to be the worst performing investment in its history.

What else could there be lurking in the shadows of GEPF poor decisions and crony capitalism?

African Bank – The GEPF is African Banks Largest Shareholder was in crisis due to the over selling of unsecured debt. This basically means, they gave credit (buy now pay later) to people buying ridiculously overpriced and garish furniture to people who has ZERO hope of being able to pay for it. Remember Ellerines and their stupid adverts? Them.

So we have two beauts here, all partially funded by the GEPF. The GEPF in these two instances would have been better off buying their subscribers some popcorn, a coke and movie tickets to “Cry the Beloved Country”. It is no wonder we hear comments about how over run the economy is with White Monopoly Capital or that fact that transformation hasn’t happened at fast as it should have – in light of the two examples above do we really believe that BS? I know, if I go out of the joll and drop R10K on tequila, I don’t go and blame the bar man. No matter how kak I feel the next day.

Wouldn’t you be pissed off and looking for someone to blame? So when you summon up enough courage to watch more of the SONA 2017 on Youtube, remember sometimes the good news stories write themselves. #silverlining

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