Eskom pact won’t include pledge to use state worker pensions

As had been initially proposed.
Image: Bloomberg

A pact between South Africa’s government, labor unions and business to cut the debt of the stricken national power utility won’t include a pledge to use the pensions of state workers as had been initially proposed.

An agreement due to be signed at the next meeting of the President’s Working Council has no firm undertaking to use the funds of the R2.1 trillion Public Investment Corp, which manages state workers’ retirement money, or private pensions, said Cas Coovadia, the chief executive officer of lobby group Business Unity South Africa. Coovadia spoke in an online briefing with Bloomberg.

The Congress of South African Trade Unions proposed in December that funds from the PIC and the Development Bank of Southern Africa, a state lender, be used to cut Eskom Holdings’s debt to about R200 billion. The utility currently has a debt burden of about R480 billion and is struggling to meet its costs.

“We just said all possible public and private financial support for Eskom and to reduce its debt must be mobilised,” said Matthew Parks, parliamentary coordinator of Cosatu, which is a member of the country’s ruling coalition. “We kept it high level.”

A date for the meeting where the accord will be signed hasn’t been set. It was due to take place on August 3 but was delayed.

Cosatu’s initial proposal raised concerns that pension funds could be forced to invest in Eskom through the use of so-called prescribed assets. Business leaders, including Coovadia, have said while private investors are willing to invest in state companies and infrastructure, they don’t want to be compelled or directed to, and must earn an acceptable return on investment.

© 2020 Bloomberg

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Don’t use government employees pensions…use taxpayers hard earned cash instead

No, no and definitely no.

Maybe they will not use pension funds now. Not directly anyway. They will use pension funds indirectly for sure, because they don’t have any alternatives. They will expropriate pension savings without compensation through a mechanism that not one man in a million will be able to identify, a method known as financial repression.

There is no alternative method to pay down government debt.

End of comments.

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