Picture a company responsible for the retirement savings of millions of people, then picture most of its board resigning in a single week. That is roughly what has happened at the Public Investment Corporation, the state-owned manager that invests the pensions of South Africa's government employees.
Chair David Masondo and five other non-executive directors resigned, leaving the corporation with only five board members. Masondo stepped down saying his decision is in the interests of the stability of the PIC and the confidence of millions of South Africans. The job is not an ordinary one: under the law governing the PIC, the finance minister designates the chair, a role traditionally filled by the deputy minister of finance.
A boardroom emptying out
Finance Minister Godongwana accepted the resignation and moved quickly. He dissolved the remaining board and will name an interim unit to serve until a permanent structure is appointed, and said he will appoint a new board as stipulated by the PIC act in consultation with cabinet.
The numbers involved are enormous. Business Day reports the PIC manages about R3 trillion in assets on behalf of the Government Employees Pension Fund and other public-sector clients. Labour federation Cosatu puts the asset base higher, commending the doubling from R1.8 trillion in 2020 to over R3.6 trillion. Whichever figure you take, even a tiny percentage represents billions of rands.
Why taxpayers should care
The stakes reach beyond pensioners. The Government Employees Pension Fund is a defined-benefit scheme: by law, if its investment performance falls short, the state, and by extension the taxpayer, is legally obligated to make up the difference. All of this lands while the PIC is already under intense scrutiny, following the suspension of its chief executive, whistleblower allegations and a governance investigation by the Financial Sector Conduct Authority. Labour federation Cosatu has urged Treasury to move swiftly and call for public nominations for a new board, insisting the money is "not a private slush fund."
Songezo Zibi, who chairs Parliament's standing committee on public accounts, did not soften it: "If they worked for a private company, they would be in prison for gross negligence." The test now is whether the interim board Godongwana assembles can steady an institution this large before the next crisis finds it.
