Federation calls for use of prescribed assets as a solution
Business Leadership South Africa (BLSA) on Friday hit out at trade union federation Cosatu’s call for prescribed assets to be used to rescue embattled Eskom from financial ruin.
This is when government authorises the investment of retirement savings into certain developmental assets.
BLSA said while the case of Eskom is the biggest headache, there are other concerns on the periphery such as the future of SAA and Denel.
“The prescribed assets proposal isn’t a new idea in the history of the management of the South African economy. The apartheid state experimented with prescribed assets as far back as 1956 through the Pension Funds Act,” BLSA said.
“Bringing back a policy used by the National Party government that prescribed that a specific percentage of state pensions goes into government bonds that were, in turn, used to fund government and semi-government institutions will have dire consequences, which will worsen the plight of the already struggling man in the street.”
On Tuesday, Cosatu said it wanted a special-purpose vehicle put together to include the Unemployment Insurance Fund, the Public Investment Corporation, development financing institutions and the Development Bank to take over 50% of Eskom’s mammoth R450-billion debt.
The calls for prescribed assets for pension funds were given impetus by media statements made last year by ANC economic policy head Enoch Godongwana, who said the governing party was investigating using prescribed assets to avoid having to ask for emergency funding from the International Monetary Fund to bail out cash-strapped and debt-ridden state-owned entities.
Pension fund managers manage more than R6-trillion of assets.
Cosatu’s stance was also not supported by the Public Servants Association of South Africa (PSA), the country’s second-biggest public sector union with more than 230 000 members in the public service.
“The PSA is shocked and angered by Cosatu’s public support for a R200-billion investment in Eskom using workers’ money, including public servants’ pension fund money,” PSA said.
“Should Eskom not be able to fulfill its financial obligations of the loan, it will place a further financial burden on government to ensure that GEPF [Government Employees Pension Fund] members’ pension benefits remain intact. In the current economic environment that South Africa is faced with, this will have disastrous effects.”
By Kabelo Khumalo
Business rubbishes Cosatu’s fix for Eskom
