South African trade union Solidarity announced that it has started a legal process to stop plans to financing Eskom from the Government Employees Pension Fund (GEPF).
The union says it has written a letter to the GEPF as well as the Public Investment Corporation (PIC), and it is demanding that the Trustees and the Board of these institutions should not accept the controversial plan to finance Eskom from the Fund.
In the letter, Solidarity called the Trustees’ attention to their fiduciary duties. The union also pointed out that individual trustees and board members will also be held personally liable for damages if they do not fulfil their fiduciary duty.
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“The mandate of the GEPF and the PIC is to act in the best interest of the client. The board members and the trustees may not be influenced by the political agreements of other mandate givers. If goals other than the best investment return for the pension fund member are pursued, they would be unlawful,” says the union.
According to Solidarity, if President Cyril Ramaphosa makes such an announcement in his State of the Nation address, it will have an undue influence on the mandate of the GEPF and the PIC. A political gun against the heads of the GEPF and the PIC will mean the decision will not be voluntary; it will be enforced.
Using employees’ pensions to save Eskom
According to the Solidarity letter, any step or action to use employees’ pensions to save Eskom or any other state enterprise would fall outside the mandate of the GEPF and the PIC, and it will also be a breach of the contractual agreement with the members of the fund.
“In no way can an investment in a totally insolvent enterprise be in the best interest of the pension fund member,” underlined the union.
According to Dr Dirk Hermann, Solidarity’s Chief Executive, “the trustees’ mandate is not to solve the country’s major socio-economic challenges. Nor is it their task to stimulate economic growth to create possible secondary benefit for pension fund members. Their mandate is to see to it that there is a primary benefit.”
Solidarity stated that it is aware of resistance to the controversial pension plan from several other unions. “We will support every action against the plan that any other union comes up with. We need to attack the plan from as many angles as possible.”
The union also announced that it has budgeted sufficient funds for campaigns and litigation should government proceed with any other steps to use pension funds to finance other ailing state enterprises.
“We, therefore, do not only act in the interests of government officials but in the interests of all who are members of a pension fund,” stated Solidarity.
Funding bankrupt state enterprises
The union pointed out that workers’ pensions are not State money; it’s their own money.
“We must oppose a dispensation of state monopoly capital. Given the current state of government finances, workers cannot rely on state guarantees for their pension money. State guarantees are no guarantee. So, pension money has to be used to come to the rescue of an empty state treasury and then the empty state treasury must provide a guarantee to pension fund members,” stated Solidarity.
Hermann added: “It is not the responsibility of workers to fund bankrupt state enterprises. Pension capture cannot address the damage caused by state capture. A major mistake cannot be corrected by a major mistake. First it was R85 billion, now it is R250 billion.
“First it will be Eskom and later it will be Denel, the SAA and e-toll. It starts with the GEPF and what is a voluntary contribution. Later, private funds will be involved and then the involvement will be mandatory”
“We are not only contesting this decision; we will contest the full consequences of the decisions that are yet to come. We are keen to engage with government on the question of how state enterprises should be financed. Using people’s retirement money without their consent is economically foolish and immoral,” he concluded.