Addressing the Concerns of Government Employee Pension Fund Members and Pensioners

This brief by Charles Collocott looks at the possibility of changes to the mandate of the Public Investment Corporation (PIC) in light of such suggestions made by the current Minister of Finance.



The Minister of Finance has recently made his thoughts public on changing the mandate of the Public Investment Corporation (PIC) in order to drive government policy, which is referred to in more detail below. Given that the PIC manages funds on behalf of the Government Employees Pension Fund (GEPF), with its more than 1.2 million active members and in excess of 400 000 pensioners and beneficiaries, one needs to consider the potential implications of these statements.


GEPF Governance


GEPF is required to comply with the requirements of the Government Employees Pension Law (GEP Law) which is binding on the State. According to the GEP Law:


  • A Board of Trustees (The Board) governs the Fund and is accountable for administrative and investment performance.  

  • The Board consists of equal numbers of representatives from members/pensioners and those nominated by Government.  

  • The Board determines the investment policy in consultation with the Minister of Finance.  

  • The Board approves the annual financial statements, and these are presented to Parliament by the Minister.  

  • Government is responsible for meeting the Fund’s obligations, provided any change in investment policy is subject to the approval of the Minister of Finance.  

  • A member or pensioner has the right to communicate directly with the Fund in regard to any matter which affects him or her personally.


The PIC, GEPF and Oversight

The PIC manages assets of over R 1.8 trillion, of which R 1.6 trillion are managed on behalf of the GEPF. As an example of the possibility of a broadening of the investment portfolio, National Treasury told parliament’s Standing Committee on Finance that it was considering the PIC as a potential equity partner to recapitalize South African Airways (SAA). Given SAA’s financial situation and prospects, an investment of this nature would be of legitimate concern to GEPF members and pensioners, and so the GEPF released a statement a week later which contained the following:

The GEPF would like to assure its members, pensioners and beneficiaries that the Fund has not received or been approached with such a proposal and no discussions have been held with GEPF on this matter, therefore we urge all our members and pensioners not to panic or read too much into this speculation.   

Speaking at a briefing at the ANC’s recent Policy Conference, the Minister of Finance, Malusi Gigaba, who is government’s shareholder representative for the PIC, said that as part of the drive towards “radical economic transformation” it was necessary to “review PIC’s role in driving transformation instead of it being seen narrowly as an instrument for empowerment of a few elites” [1]. No substantiation was provided for the reference to elites.   

There have been numerous reports in the media of Minister Gigaba having a close relationship with the Gupta family. He was also cited in the Public Affairs Research Institute (PARI) report released in May this year, entitled Betrayal of the Promise: How South Africa is Being Stolen.  The PARI report argues that “The appointment of Malusi Gigaba as Minister of Public Enterprises marked the start of the reconfiguring of the State Owned Enterprises (SOE) Boards. [T]he first step in the repurposing [2] of SOE boards.” Repurposing is defined by the report as “[T]he organized process of reconfiguring the way in which a given state institution is structured, governed, managed and funded so that it serves a purpose different to its formal mandate.”    

Added to this, the Deputy Minister of Finance, Sfiso Buthelezi, is now the Chairman of the PIC.  Immediately after Buthelezi’s tenure as Chairperson of the Passenger Rail Agency of South Africa (PRASA), The Public Protector published a report entitled Derailed in August 2015 and ordered that all PRASA contracts above R10 million awarded from 2012 to 2015 be investigated. The investigation which was conducted by Treasury prior to Deputy Minister Buthelezi’s appointment to Treasury recommended that Buthelezi and his fellow board members must be criminally charged for contravening several sections of the Public Finance Management Act (PFMA) in the course of the awarding of at least 30 contracts. Ironically, as Deputy Finance Minister, Buthelezi is now intimately involved in the implementation of the PFMA. When former Finance Minister Nhlanhla Nene was asked recently whether Buthelezi can be said to be a fit and proper for his current position, his response was as follows:

It is common cause that the fitness and properness of people in such positions must be beyond reproach, and I would believe that this will be tested in the correct manner. [3]

According to the PIC, “[all] investment decisions are directed by detailed client mandates, which are negotiated individually with each client in line with their investment profile and risk appetite. These client mandates comply fully with the requirements of the Financial Services Board (FSB), with which the PIC is registered as an approved financial service provider.” [4]

Fortunately for GEPF members and pensioners, the GEPF is a juristic entity, separate from government and governed by a board of trustees and FSB rules such as Circular PF No. 130, entitled Good Governance of Retirement Funds. The preamble of Circular PF No, 130 states:

The assets of a retirement fund are administered for the main purpose of providing the benefits promised in terms of the registered rules of that fund. The board of management (sometimes referred to as trustees) therefore holds fund assets in trust for those persons who will ultimately benefit from them.

Against this background, GEPF members and pensioners would want to rely on a dedicated Board of Trustees to look after their interests and not to succumb to political pressure being applied to it in an attempt to divert funds to investments which may not be suitable for pension funds.

Furthermore, Parliament’s Finance Standing Committee (FSC), to whom the PIC and GEPF report, cannot be relied on for adequate oversight.  In a presentation on 18 October 2016 by the PIC to the FSC, the FSC Chairperson Yunus Carrim said that “On the whole the Committee was impressed with PIC (sic), although it did not have the technical capacity to form a true assessment.”  Added to this, full analysis of the FSC, PIC and GEPF interaction shows that the FSC has little concern for the prudence of investments made on behalf of the GEPF, but instead tried convincing the PIC and GEPF to invest in projects or areas they in their limited technical capacity saw fit. Lastly, the FSC “[C]ongratulated the PIC for providing the information on the PIC unlisted investments and were satisfied with these.” However, it has long been acknowledged by industry professionals that there has been a gross lack of transparency in the PIC’s unlisted investments.   The most well-known example is the R1 billion unlisted investment in Independent Media in 2013.      



It would not be unreasonable to assume that the PIC and GEPF will be under increasing pressure to make investments to assist state-owned enterprises or other companies with close links to Government, which would, in the normal course, be considered less than prudent.  Some of the members of Government who have oversight responsibilities in this field, have made their intentions clear in this regard.  If the GEPF Board of Trustees acts as they should in representing their members and pensioners, irresponsible investment decisions will not be made.

As mentioned earlier in this brief, in terms of the GEPF rules, any member or pensioner has the right to communicate directly with the Fund in regard to any matter which affects him or her personally.  If there are any concerns on the part of GEPF members or pensioners, they should take up this standing offer and convey their concerns to the GEPF directly. The membership of the GEPF Board of Trustees is set out in the Annexure.



Charles Collocott




Annexure – GEPF Board of Trustees

Dr Renosi Mokate

  • Chairperson of the Board of Trustees
  • Chairperson of the Investment Committee

Major General Dries de Wit

  • Vice Chairperson of the Board of Trustees Chairperson of Benefits and Administration Committee

Mr Stadi Mngomezulu

Mr Bhekithemba Gamedze

Mr Mpho Kwinika

Dr Frans le Roux

Ms Barbara Watson

  • Chairperson of the Governance and Legal Committee – GEPF

Dr Barry Kistnasamy

Ms Edith Mogotsi

Ms Gladys Modise

Ms Moira Moses

Mr Seth Makhani 

  • Chairperson of Finance and Audit Committee

Ms Dorothy Ndlovu

Mr Edward Kekana

Mr Pierre Snyman

Ms Kgomotso Hilda Makhupola




[2] Own emphasis added