Nicola Mawson
As the Public Investment Corporation (PIC) – South Africa’s largest asset manager – approaches the R2.7 trillion benchmark in assets under management, taxpayers should be vigilant, cautioned prominent Chartered Accountant (CA) Khaya Sithole yesterday.
Highlighting the crucial link between the PIC and government employees’ pensions, Sithole warned that any shortfall in the PIC’s assets relative to its liabilities could pose a significant financial burden on the public.
Founded 113 years ago, the PIC manages a diversified portfolio for clients such as the Government Employee Pension Fund (GEPF), which has almost 1.3 million active members from across the government, including those who serve as policemen, nurses, and teachers, among other entities.
The GEPF’s diversified portfolio accounts for 87.97% of PIC’s assets under management.
Sithole noted that some 95% of the GEPF’s funds were invested by the PIC.
He told Business Report that the PIC’s importance was not something that can be overemphasised due to its size, the amount of people it caters for, and the fact that these civil servants were guaranteed a certain rand value upon retirement because it was a defined benefit fund – the last of this type in South Africa.
Should the PIC’s liabilities exceed its assets, it will need bailing out, Sithole said.
“It’s a very important public institution. It is remarkably important for us to keep track of what the PIC does and to keep track of what the GEPF does,” Sithole said.
The PIC’s largest clients are the GEPF, the Unemployment Insurance Fund, the Compensation Commissioner Fund, the Compensation Commissioner Pension Fund and the Associated Institutions Pension Fund.
In its recent financial year, the PIC saw a 3.6% growth in assets and declared a R141 million dividend to the government.
However, it reported R635 million in liabilities as of March last year, with Book One of its Annual Report providing no update on this figure. An elusive Book Two is yet to offer further clarity.
Writing in the recent annual report, CEO Abel Sithole stated that, “by the close of the financial year, the PIC had implemented 242 of the 243 recommendations of the Mpati Commission of Inquiry that are within its control – a process diligently monitored by the PIC board”.
The Commission’s adverse findings on numerous transactions and on actions of various individuals in investment decisions led to the PIC establishing a Risk Committee in 2019.
In Book One of the PIC’s Annual Report, Chairman David Masondo said there is a growing focus on sustainable investing, with Environmental, Social, and Governance (ESG) considerations.
“Sustainable investing aligns with South Africa’s development goals of job creation, social equity, environmental protection and the mitigation of climate change. The PIC systematically integrates ESG factors into its investment analysis and decision-making, across all asset classes,” he said.
Simultaneously, PIC chairman and deputy finance minister, David Masondo, has been vocal about a growing focus on sustainable investing.
“Sustainable investing aligns with South Africa’s development goals of job creation, social equity, environmental protection, and climate change mitigation,” Masondo stated, indicating that the PIC integrates Environmental, Social, and Governance (ESG) factors across all its investments.
Despite its operational successes and a sixth consecutive unqualified opinion from the Auditor-General on its financial statements, the PIC’s reputation is not without controversy.
Masondo himself faced scrutiny for allegedly abusing his position in a personal matter in 2019, which led to calls for him to step aside from his roles by the ANC’s internal Integrity Commission.
Given the magnitude of the PIC’s responsibilities and the scope of its impact, Sithole’s call for vigilance underscores a critical need for public oversight.
The stability and prosperity of countless civil servants depend heavily on the PIC’s ongoing fiscal health, making it imperative for all stakeholders to remain informed and engaged with its performance.
BUSINESS REPORT
