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Monday, 13 May 2019 14:38

The Sunday Times Business Times writes that concerns about the funding and governance of state pensions continue to plague the Government Employees Pension Fund (GEPF), leaving members and pensioners anxious and throwing a spotlight on implications for the economy.

Last week, Adamus Stemmet, spokesperson for the Association of Monitoring and Advocacy of Government Pensions (AmaGP), said conflicting statements from the GEPF about the certainty of long-term funding were "creating a lot of anxiety".

In April, the GEPF assured pensioners of the fund's stability - but this month it acknowledged the possibility that the pensioners may lose their increases.

The long-term funding shortfall is an estimated R583bn, meaning the fund level would be at 75.5%. Trustees aim to maintain the long-term funding level at or above 100%, which is the current status of the fund. The GEPF's definition of "long term" is based on the life expectancy of its youngest member, 75 years.

The AmaGP, which was established in 2016 and has more than 7,000 members, is in discussions with the public protector about how civil servants' pension monies are invested, said Stemmet.

The Public Investment Corporation (PIC) invests money on behalf of the GEPF in listed equities, unlisted investments and offshore.

AmaGP say it has raised concerns over questionable investments and a lack of transparency with the fund and the PIC in several letters since 2016, to which there has been either no or inadequate responses.

The GEPF said it "is already in talks with the public protector" on the complaint lodged by AmaGP.

Abel Sithole, the GEPF's principal executive officer, said despite a decline in long-term funding levels, the fund was not in danger of a depletion of its assets. "We are nowhere close to that."

He said a high number of resignations, a drop in investment returns for the first time in four years that is affecting solvency reserves, and pension increases are among the factors affecting funding levels.

The GEPF, which has 1.2-million members and 400,000 pensioners and beneficiaries, making it the largest pension fund in SA, received R70.4bn in contributions in 2018 and paid out R95bn in benefits.

Sithole said the GEPF is considering options to improve the projected funding shortfall. These include paying below-inflation pension increases, which the GEPF trustees are reluctant to do. Another option is for the government and unions to agree to lower wage settlements, or to ask the government to contribute more than 14.4%.

The GEPF is also in talks with the National Treasury about raising its threshold for offshore investments from 10%. Private fund managers can invest up to 30% externally. The GEPF also wants to invest more in unlisted companies.

Stemmet said the AmaGP will "support any investment as long as the aim is a good return for the pension fund and it is not politically motivated. Our experience is that too many of these investments are underperforming, as [former PIC CEO] Dr Dan Matjila said on 17 October 2017."

The GEPF is the custodian of R1.8-trillion of state pensions, which excludes those for staff employed by Transnet, Eskom and municipalities. It accounts for a large share of the capital and savings in the economy and is seen as one of the factors protecting SA's ailing economy from volatility.

Michael Sachs, an adjunct professor in the Southern Centre for Inequality Studies at Wits University, said: "In the absence of a GEPF fund … we could see ourselves becoming more vulnerable to global shocks.

"You have this huge fund which backstops government borrowing. A significant share of the deficit is funded by the GEPF. Probably an even greater share of state-owned company debt is funded by the GEPF. It makes a difference to borrowing conditions faced by state-owned companies; it makes a difference to borrowing conditions faced by the fiscus, and I would say a very large difference."

But the fund as a state asset base is not monitored by international ratings agencies.

"If I were to advise them I'd be telling them that they should be," Sachs said.

"Nobody looks at the assets of the government; they only look at the liabilities, which is the debt. Whether they look at that explicitly, it implicitly defines the behaviour of the macro economy in a way that will feed through. So you would have less macroeconomic volatility, which would feed through into the rating."

In recent times civil servant pensions have also been eyed to potentially bail out struggling SOEs, but eroding the GEPF asset base to solve such a problem creates long-term funding challenges, said Sachs, who is a former budget head at the National Treasury.

Though he doesn't think "there's an immediate danger of the GEPF being destabilised", there could be consequences for the macro economy "if, over time, you kind of open the door to the spending of those assets".

Read the original of this Business Times report by Asha Speckman at BusinessLive (paywall access only)

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Monday, 13 May 2019 07:26

The Sunday Times reports that countless fathers have been left out in the cold after the government failed to make good on new legislation giving them 10 days’ paid paternity leave.

An amendment to the law was ratified last November and 1 January was earmarked for implementation, but the department of labour has not activated it.  Men currently do not qualify for any paid paternity leave.

Labour lawyer Michael Bagraim, who joined the fight for the new legislation, said he was “gobsmacked” that six months had passed since the new legislation was approved.  “I have over 2,000 small companies as my clients, and I proudly trumpeted the changes in the law.  Now I have had ongoing problems for months as clients are confused, and I have had to apologise, but it’s not for me to apologise,” he said.

Wessel van den Berg, a manager at NGO Sonke Gender Justice, said:  “Data shows that in SA, women do eight times as much unpaid care work as men.”  He added that paternity leave was “a major step forward in breaking down the stereotypes of men as breadwinners and women as caregivers”, and that the delay in implementation of the new Labour Laws Amendment Act was adding to women’s burden.

Hendri Terblanche, of Cape Town, began the campaign for paternity leave five years ago after his twins were born prematurely.  “We had to fight hard to get this leave in place so that dads can bond with their babies in the early days of life, which is crucial,” he said.  “Why should South Africans be penalised for government departments not operating as they should?” he asked.

The department of labour referred The Sunday Times to the Unemployment Insurance Fund (UIF), which redirected the query back to the department.

Department spokesperson, Thembinkosi Mkalilpi, said parental leave was “passed by parliament and signed into law by the president”, but the UIF was “not ready with their systems”.

UIF spokesperson Lungelo Mkamba said on Tuesday:  “That falls within the ambit of the department of labour.  We cannot do anything until they say so.”  But on Thursday he updated his statement:  “We are busy finalising regulations and working around the clock to be systems-ready before we start implementation.  The matter is receiving our urgent attention and we hope to start the implementation soon.”

Ben Sibanda, as security guard in Gauteng said he felt duped by the announcement of paternity leave.  “It was a difficult pregnancy and I wanted to be with my wife and baby for 10 days, but my company refused,” he said

Sibanda used a legal advisor and a “huge fight” ensued before he got his 10 days, but he had to forfeit his salary for those days.

The original of this report by Tanya Farber appeared on page 8 of The Sunday Times of 12 May 2019.

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Monday, 13 May 2019 04:58

The Sunday Independent reports that the National Union of Metalworkers of SA (Numsa) has defended the dismal performance of its newly formed political outfit at the general elections last week.

Numsa resolved to form a socialist party in 2013 after abandoning the ANC-led alliance and set up the Socialist Revolutionary Workers Party (SRWP) late last year.

The SRWP – led by Numsa general secretary Irvin Jim – secured only 24439 votes, which was 0.14% of the more than 17.5 million total votes cast in the national ballot.

Numsa national spokesperson Phakamile Hlubi-Majola said while Numsa gave birth to the SRWP, it was not a given that its membership would throw its weight behind it.

“Yes, Numsa took the decision that a political party must be formed but that political party still has to win the hearts and minds of Numsa members. That is how it is. You can’t assume that they will vote for the SWRP. The fact of the matter is that we still have to do the work of winning members of Numsa the same way we have to win all other members of the working class,” Hlubi-Majola said.

She is also acting provincial chairperson of the SRWP for Gauteng, where the party secured 5465 of the more than 4 million votes cast in the province.

She said it was not realistic to expect the membership of the outspoken union to vote for SRWP.  

“They have always had the freedom to choose which political party best represents them.  Within Numsa you have supporters of the DA, the ANC and the EFF. That is how it is as the union,” she said.

In 2017, Numsa helped form the SA Federation of Trade Unions which claimed to have more than 1 million members, who were also expected to vote for the SRWP.

Hlubi-Majola said the SRWP did not expect to secure significant voter support as it was new, adding that the decision to contest was mainly aimed at profiling the party and putting socialism on the map.

“The decision to contest was taken in December last year, so we were one of the very last political formations to actually begin the work of campaigning while at the same time we are a new political party and still building our structures around the provinces,” she said.

Political analyst Lukhona Mnguni described SRWP as what appeared to be a vanity project for Jim and his collective.

“Even the person who is the leader of the party was around number 17 on the list to the National Assembly.  Ordinarily, the leader would be number one so that it gives the public confidence.  “The leader (Jim) appears to be too married to being the secretary of Numsa and not necessarily leading the (political) party,” Mnguni said.

The original of the above report by Siviwe Feketha appeared on page 9 of The Sunday Independent of 12 May 2019

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Monday, 06 May 2019 07:41

City Press Business reports that the efforts of eight former Exxaro Arnot Colliery employees who were laid off in 2015 have paid off. Their former employer not only handed them a lifeline, but also made them co-owners of the mine.

The eight employees – Mxolisi Hoboyi, Bontle Aphane, Raymond Khumbana, Mandla Ntulo, Hitandra Lala, Poppy Ranta, Paul Kasango and Vukani Thole – were among the 1 200 employees who lost their jobs when the mine closed in 2015 because Eskom did not renew its coal supply contract.

The eight are now 25% owners of the coal mine. The rest of the former workers own another 25% and Wescoal owns the remaining 50%, having put in more than R100 million.

All 1,200 former employees, including those who have already been employed elsewhere, comprise the shareholders of the 25%.

During a ceremony held at the mine near Middelburg in Mpumalanga earlier in the week to mark the handing over of the workers’ 50% shareholding in the venture, Mineral Resources Minister Gwede Mantashe said the deal was a groundbreaking first for the country and there was a responsibility on all the stakeholders to make it a success.

Speaking to City Press on the sidelines of the event, Hoboyi said the eight employees, who had contributed their pensions to own 25% of the workers’ 50%, had started a company called Innovators Resources.

The company had been advised by Exxaro to get a partner with enough operating capital, which led to Wescoal coming on board.

“Innovators Resources was established solely for this transaction and to reopen the mine. We even took a decision that none of us would look for work elsewhere. That is the risk we took.” The company negotiated with Exxaro for almost two years to thrash out the details of the deal, he said.

Hoboyi said although Wescoal’s contribution was R100 million, the overall value of the deal was more than R200 milllion. He said 5% of Wescoal and the workers’ shares had been allocated to communities to comply with the mining charter.

Exxaro chief executive Mxolisi Mgojo said the board had agreed to give all its assets at the mine, including the mining right, to the former workers to use as equity to make up the other 25% of the deal.

Mgojo said although a deal such as this had not ever been done in the country before, it had not been a difficult task to convince Exxaro to

“We didn’t do it to improve Exxaro’s BEE score. All we had to do was say (to the board) that there was a chance to create a new BEE company. There comes a time even BEE companies can create new BEE companies,” Mgojo said.

At its peak Arnot colliery produced 6 million tons of coal a year for the neighbouring Eskom-owned Arnot power station, but had to shut down in 2015.

The mine is expected to reopen in September. Mantashe said the new management, made up of Innovators Resources and Wescoal, has already committed to give preference to the retrenched workers first before considering new workers.

No reason yo celebrate

The Mhluzi Unemployment Structure, made up of local community members, protest outside the Exxaro Arnot Colliery during the ceremony. They handed over a memorandum to Mineral Resources Minister Gwede Mantashe demanding the reopening of nearby Optimum mine and the employment of locals, among other issues

The original of this article by Lesetja Malope appeared on page 5 of City Press Business of 5 May 2018

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Monday, 06 May 2019 04:39

City Press reports that the ongoing business rescue at Optimum Coal has finally claimed its first victims – more than 400 workers at the mine were served with retrenchment letters on Tuesday.

This is the first retrenchment since the Guptas took over the mine in 2015, and a year after the mine was placed under business rescue in February 2018.

Some of the workers affected by the retrenchment were part of the group who protested against Mineral Resources Minister Gwede Mantashe when he attended a ceremony at the nearby Arnot mine on May Day earlier this week.

City Press spoke to Richard Mkhuzulu, the National Union of Mineworkers (NUM) branch secretary at Optimum. He paints a bleak picture of the conditions workers are currently going through while the business rescue process drags on.

Speaking from his home at Mhluzi, a township outside Middelburg, Mpumalanga, Mkhuzulu said the closure of the biggest mine in the area had already had devastating consequences, and the recent retrenchments had all but dashed hopes of an economic recovery for the workers.

Mkhuzulu said that although the workers were told that the process would be completed by July, he doubted the veracity of this statement.

“The last time I checked, there have been more than 50 court cases delaying the process. As employees, out of desperation we went to the [business rescue] practitioners and asked to be terminated so that we could access our pension monies. But nothing has happened.”

Mkhuzulu said 75% of the workforce at the mine were contractors, adding that the financial straits workers found themselves in had gone beyond vehicle and house repossessions.

“We had to go to the municipality to negotiate that at least we be exempt from paying rates and instead be allowed to buy electricity – because the rule is, you can’t buy electricity if you haven’t paid rates,” he said.

He said workers had to resort to queueing at soup kitchens, organised by charities in the area.

“For us as leaders, it is very painful because we have even lost members. They died because they could not access medical services, even though they were on chronic medication. They did not have medical aid,” Mkhuzulu said.

In addition, almost all the mines in the area’s coalfields do not have hostels, unlike some of their counterparts in the gold and platinum sectors – meaning the consequences of the problems are transferred to the mine-hosting communities, adding to the burden of the municipality.

While he did not absolve the current administration entirely, Mkhuzulu blamed the situation on former mining minister Mosebenzi Zwane. “We are in this mess because of the Guptas and Zwane. He was the first minister to come to Optimum and pretended to be pro the working class as soon as the Guptas took over.

“At some point, the management even tried to mobilise us so that when Zwane visited, we should write placards criticising the banks for closing Gupta bank accounts. We were also encouraged to go and protest at the banks. The then CEO, George van der Merwe, was the one telling us to go there [to protest at the banks],” he said.

Mkhuzulu said NUM had knocked on several doors, including those of the department of mineral resources and the presidency, pleading for help, to no avail.

“Zwane and his crew were wrong but at least decisions were taken, even if they were wrong. Right now, there is no decision being taken. Mantashe is not taking any decision and people are suffering,” Mkhuzulu said, adding that NUM members were disappointed at government’s reaction to the situation.

He also criticised the business rescue practitioners, claiming that when they took over, they did not pay over the taxes collected from workers.

“This process is dirty because some of these practitioners want to get money out of this,” he said.

Mkhuzulu added that at least one bidder for the mine, Seriti Resources, had told NUM that it was pulling out after allegedly being asked for a bribe.

Mike Teke, the chief executive of Seriti Resources, confirmed that the company had shown an interest in acquiring Optimum during the early stages of the bidding process, but had pulled out to focus elsewhere.

Teke denied having been asked for a bribe, saying he did not know where the allegation originated.

Mkhuzulu said he feared that with the process to seek new bidders restarting, the same factors would taint it, pushing workers deeper into economic hardship.

He said that as tragic as the latest retrenchment letters might seem, to some workers this communication meant nothing.

According to Louis Klopper, one of the mine’s business rescue practitioners, the process had to be restarted as Eskom had made additional demands when the process was almost complete and a decision on the successful bidding company had been finalised.

“The process was complete the first time around, but it was suspended because Eskom insisted that it wanted to engage on the coal supply agreements,” Klopper said.

Klopper added that the process should be completed by end-July, when a meeting of the creditors would be held and a preferred bidder decided on.

“The number of employees who’ve been retrenched is approximately 600 at Optimum,” Klopper said.

He attributed the retrenchment to the unsuccessful post-commencement finance process, which would have required upfront funding from the preferred bidder.

He said the process of advertising invitations to bidders had already begun.

Project Halo, said to have been the preferred bidder late last year when the rescue was almost completed, would have to resubmit its bid if it was interested, said Klopper.

He said he could not recall if Seriti was ever in the running when the bidders were initially invited.

Mbongiseni Duma and Paul Buckley, two of the directors of Project Halo, declined to comment on the matter.

The original of this report by Lesetja Malope appeared on page 3 of City Press Business of 5 May 2019

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