11/10/2017 08:50 SAST | Updated 11/10/2017 08:51 SAST

A New Pension Superfund Could Be Open To Abuse

There are concerns that a new overarching pension fund could be seen as a cash cow, like the PIC.

Rogan Ward / Reuters
South African Finance Minister Malusi Gigaba speaks to journalists at the World Economic Forum on Africa 2017 meeting in Durban, South Africa, May 3, 2017.

Concerns have been raised that a proposed new overarching pension fund will be vulnerable to abuse by politicians, Fin24 reported on Wednesday. Government wants to create a centralised pension fund, called the National Social Security Fund, which would centralise all current pension funds, public and private, into a fund estimated at R3-trillion.

The fund is currently being negotiated at the National Economic Development and Labour Council (Nedlac). All income earners will reportedly be required to pay 12% of their income to the fund.

The fund will also encompass the Unemployment Insurance Fund.

However, there are reportedly fears that the fund will be viewed by politicians in the same way that some politicians are believed to view the Public Investment Corporation (PIC) –- as a potential source of funds to bail out failing state-owned enterprises (SOEs).

On September 26, finance minister Malusi Gigaba held a press briefing to allay fears that plans were underway to remove the PIC's CEO, Dan Matjila, and that the PIC would be used to fund ailing SOEs.

Fin24 also reported that Gigaba had ordered a forensic audit of the PIC for the past two years. Gigaba requested that the audit take into account issues that have "played out in the public gallery" recently, although he did not state what these are.