Solly Phetoe is general secretary of Cosatu. Picture: Doctor Ngcobo / Independent Newspapers.
By Solly Phetoe
PENSION and provident funds are workers’ hard-earned savings and must be geared to support them during their careers and in retirement.
For too long, pension funds have been treated as a feeding trough for fund managers, corrupt politicians and opportunist businessmen to feast from.
The voice of workers for many years has often been ignored.
Cosatu has campaigned for comprehensive reforms of our pension laws to ensure the needs of workers are placed first and their savings are protected from abuse.
The Public Investment Corporation (PIC) is the largest investment fund in Africa with R2.3 trillion in assets; 87% of its funds come from the Government Employees’ Pension Fund with the balance from the Unemployment and Workplace Injuries and Diseases Funds.
For years the PIC occupied headlines for all the wrong reasons with politicians and businessmen involved in corrupt shenanigans.
During the decade of state capture and corruption, some politicians demanded the PIC be used to fund all sorts of adventures without the consent of workers which would have bled the PIC.
Cosatu intervened with the support of the ANC in Parliament to overhaul legislation governing the PIC which was shockingly thin and had given ministers of finance a blank cheque to appoint PIC boards and to issue any instruction to them.
The act did not require the PIC to disclose its investments to the public or even Parliament. This had seen previous and outrightly notorious PIC executives refusing to disclose investments, in particular unlisted ones. PIC CEOs previously had signing powers of billions of rand without having to get the permission from the board.
These gaping legislative omissions helped create an environment for the corrupt to loot.
In response to the litany of scandals engulfing the PIC, a judicial commission of inquiry was appointed by President Cyril Ramaphosa to place a spotlight on the corrupt activities that were taking place and make recommendations on reforms that were needed.
Cosatu with key ANC leaders in Parliament simultaneously overhauled the PIC Act to immediately address key gaps.
These were processed through extensive parliamentary hearings and faced massive resistance, overtly and covertly, from powerful individuals who did not want to see the doors of looting closed.
Key changes made to the act that came into effect in 2019 include clear criteria and qualifications for appointing board members, which is now no longer simply the sole prerogative of the minister.
Critical for workers is the inclusion of three worker representatives selected by labour itself in the Public Service Central Bargaining Council. This helps ensure that workers have a say in how their monies are spent and equally to enable them to keep an eye out for dubious investments.
The PIC is now guided by a clear set of progressive criteria requiring investments to grow the pension and insurance funds and thus protect and cover workers, and also to support South Africa’s economic growth, job creation, infrastructure, jobs-rich economic sectors and sustainable development.
All PIC investments must be made available for public and parliamentary scrutiny. These are critical as aggrieved parties can then take the PIC to court or Parliament where investments do not meet such criteria.
Workers’ funds are protected as the PIC is legally obliged to ensure their sustainability, and the days of the PIC wanting to hide dubious self-enrichment schemes are over with reports required to be made available on their website for all to scrutinise.
On September 1 this year, Cosatu’s campaign for the first stage of the Two Pot pension reforms commenced.
These enable workers to access a limited portion of their savings immediately with up to R30 000 once-off and then a third of future savings once a tax year.
This is to give struggling workers an alternative to resigning to access relief from their savings. This helps keep workers employed, avoids depleting their pensions, boosts long-term savings while simultaneously providing workers with badly needed immediate relief.
Cosatu has now made further pension fund reform proposals to Treasury. These include ensuring workers who lose their jobs retain full access to their savings, allowing workers greater access to savings accumulated by September 1, helping workers settle suffocating debt, seeing how taxes can be made less painful on low-income workers, allowing pension funds to be used to support education costs and setting caps on administrative fees charged by fund administrators.
Given the very real challenges faced by millions of workers and their families, it is critical that these engagements be expedited to ensure that they come into effect over the next two tax years.
The third major victory Cosatu has been able to achieve on this front for workers in recent years with the support of our ally, the ANC in government, has been the introduction of the Social Relief of Distress (SRD) grant, and its retention when some wanted to end it.
With all of its limitations, it has provided an invaluable lifeline to 8 million unemployed persons, enabling them to buy a loaf of bread a day. It provides the foundation for the long-sought Basic Income Grant.
What is needed now is to recover value lost to inflation, raise it to the Food Poverty Line and to link its recipients to skills and employment opportunities to help them enter the labour market and find permanent decent work.
Cosatu is pushing the Department of Employment and Labour at Nedlac for an urgent roadmap to overhaul the UIF and Compensation Fund to ensure businesses can register employees with ease and workers can access their monies timeously.
We are also having engagements to ensure all workers are covered by these important insurance funds.
Engagements on a path towards comprehensive social security need to be revived. Equally, we must expedite interventions to unlock the economy and drastically reduce unemployment.
While at times the period it takes to achieve consensus on various reforms is frustratingly long, we are pleased that our efforts have achieved important victories benefiting millions of workers with more still to come.
Solly Phetoe is general secretary of Cosatu.
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