Tag: funds

Source: Creamer Media’s Engineering News

The Unemployment Insurance Fund (UIF) will open and start processing the latest and last round of Covid-19 Temporary Employer/Employee Relief Scheme (TERS) applications from Monday, November 23.

Applications will close at the end of December.

This follows the announcement by President Cyril Ramaphosa that the TERS benefits would be extended by another month to October 15.

The TERS was established to assist employees who lost income owing to the coronavirus and the regulations limiting economic activity during the various levels of the lockdown.

Since March, just over R52-billion has been disbursed in 11.5-million payments through more than one-million employers.

Source: MyBroadband

Many poor South African municipalities are drowning in debt to Eskom due to a culture of nonpayment by consumers, according to a report in the Sunday Times.

Maluti-a-Phofung, one of the poorest municipalities in the country situated in the foothills of the Drakensberg in the Free State, owes Eskom close to R3-billion, the report stated.

Co-operative governance minister Zweli Mkhize said the municipality was the worst electricity payments defaulter in the country, criticising the lack of payment by consumers and problems with ageing infrastructure.

Mkhize said that political instability in poor municipalities paired with a failure to perform basic legislative responsibilities has lead to the collapse of service delivery.

“Municipalities which enjoy political stability tend to be characterised by a more settled and mature political and administrative leadership,” his report stated.

Uplifting poor municipalities
In his presentation to the ANC’s national executive committee, Mkhize said he had appointed an advisory panel to find a solution to the growing debt of these poor municipalities.

Recommendations included a strong provision of basic services and a concerted effort to promote payment among residents in these areas.

Mkhize’s report also raised concerns of inadequate skills and political infighting within municipal councils, which he said weakens the ability to perform legislative tasks and creates an environment in which it becomes easier to commit fraud.

Following the loss of R1.5 billion in municipal funds invested in VBS Mutual Bank, Mkhize said municipalities should be transparent about planned capital projects and find alternatives to preserve financial stability.

The total debt owed to Eskom by South African municipalities has reached R14 billion, with delivery of services such as sewage and water also suffering in affected municipalities.

The energy regulator recently announced that Eskom plans to recoup the vast amounts of money lost in unbudgeted costs incurred in the 2014-2017 financial years.

The utility is able to raise power prices by 4.4% to regain the expenses through its regulatory clearing account, with standard tariff customers bearing the brunt of the R32.7 billion it aims to recover.

Eskom is also said to be affected by a coal crisis, where at least four of Eskom’s 15 coal-fired power stations had less than 10 days of coal on hand in September.

Needy state eyes private pension funds

Concerns that politicians view the Public Investment Corporation (PIC) as a cash cow will loom large over discussions to establish an overarching pension fund for South Africa.

The new fund wants to consolidate the more than 5 000 public and private retirement funds into one giant mandatory institution, possibly under government control.

The new centralised retirement fund or National Social Security Fund (NSSF) will centralise current retirement funds estimated to be worth R3trn. It aims to force South Africans to save for retirement, as well as cross-subsidise lower income earners.

It also plans to cut administrative costs and streamline all public and private retirement funds as well as the Unemployment Insurance Fund into a single integrated structure.

All income earners will be required to pay 12% of their annual salary to the NSSF, creating the multi-trillion rand fund.

But labour and investment analysts have warned that unless the centralised retirement fund has good governance structures in place, it could potentially be used to bail out failing state-owned onterprises (SOES).

Slow negotiations at Nedlac

The new fund’s negotiations are taking place at the National Economic Development and Labour Council (Nedlac) over the next few months. When government released the proposal in November 2016, it said the complexity of the issue would require multilateral negotiations at Nedlac.

While progress has been slow at the Nedlac task team on a potential model for the NSSF, unions especially are adamant that real checks and balances be put in place for this potentially massive fund.

Labour concerns

While it is still unclear what the NSSF’s structure will be, organised labour appears to have learnt its lesson from the PIC.

The Federation of Unions of South Africa (Fedusa) sent its senior negotiators to Nedlac’s Comprehensive Social Security Task Team to negotiate on the NSSF.

Fedusa has been leading the calls against government’s alleged attempts to meddle with state pensions, and has once again threatened to ask the Government Employees Pension Fund (GEPF) to terminate its contract with the PIC.

“When you to create a national pension fund, contributors have to be part of the governance structures,” said Fedusa general secretary Dennis George.

He admits the PIC lacks some of these governance structures and laments the “high amount” invested in SOEs.

Trade union federation Cosatu maintains it has always opposed the current format of the PIC, which gives the finance minister powers to appoint board members in consultation with Cabinet members.

The PIC Act of 2004 isn’t specific about the influence the GEPF or trade unions should have in determining the board of the PIC, only stipulating that the finance minister should have “due regard” to the nominations made by the depositors.

“This has allowed government and Treasury a disproportionate amount of power over workers’ pensions,” said Cosatu president S’dumo Dlamini.

He added that “government has always sought to decide on our behalf, we are talking about workers’ pensions or deferred salaries, we want to always have a say… who is representing there, can’t be purely the prerogative of government and Treasury”.

Cosatu has requested a meeting with Finance Minister Malusi Gigaba to discuss its concerns around the PIC.

‘Trust has been lost and will never come back’

Asief Mohamed, chief investment officer at Aeon Investment Management, agrees with organised labour’s insistence for greater checks and balances in a future centralised retirement fund

“It needs to have an independent board which represents labour and employers… there should be a strong mandate. It’s all about governance, which is crucial,” Mohamed said.

A labour representative who has been attending the NSSF sessions at Nedlac but is not authorised to speak to the media, told Fin24 that there used to be implicit faith in the PIC’s ability to generate returns for its 1.2 million civil servants.

But he warned that “trust has been lost and it will never come back”.

He added that labour has requested the parliamentary standing committee on finance to intervene at the PIC as there is a fear that people are trying to raid the coffers ahead of the ANC’s elective conference in December.

The initial phase of the engagement process on the NSSF at Nedlac is scheduled to conclude in March 2018.

By Tehillah Niselow for Fin24

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My Office News Ⓒ 2017 - Designed by A Collective


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