The Newly appointed CEO of the Government Institutions Pension Fund (GIPF), David Nuyoma says there is scope to change the legislative framework governing the country's biggest pension fund, for it to be responsive to the needs of its members.
He says: "I always believe that we are living in a dynamic society where the rules of the day may not necessarily be the ones appropriate in ten years time. The foundation of the GIPF Act is the 1956 Pension Act of South Africa. "We have to be mindful of the situation that is prevailing today and see whether what is available from a legislative framework and regulation framework is responsive to our needs.
"We have a very challenging legacy, and I say this with all sincerity, not necessarily wanting to pin point anybody, but we have to ask: the 1956 Pension Fund Act was crafted by whom, for whom and why? We have to ask ourselves: is that equation and formula that was used still relevant? I don't believe that there is anything that is sacrosanct. We must be dynamic, it is the only way we are going to make progress otherwise we will be judged by history."
"I think it is the duty of the Trustees to update this kind of legislative environment and the rules that may be there. It just goes logically that, if the rules were produced 20 years ago, the circumstances have changed; it is even worse if that was done more than 50 years ago."
Joining an organisation that is notoriously secretive on its investments, Nuyoma says transparency will be the order of the day during his five-year term. "The way I have always dealt with this issue of investing public money is transparency. It is important that we exercise a good degree of transparency in the context of good corporate governance while maintaining a certain confidentiality if it is necessary. But in terms of what are the investments of the GIPF, I don't see any reason why there should be any reason for us not to have that public pride," says Nuyoma.
He told the Economist that he feels privileged to be appointed CEO of the GIPF as this is the biggest organisation from a financial perspective. "Eighty six percent of retirement funds or pension funds are here, 70+% of funds in the financial sector are here and 60+% of the country's GDP is here so to me it is a privilege to be here and join this team to manage this huge national resource."
Nuyoma says one of his greatest challenge as the CEO of the GIPF will be to find a way of optimising benefits to members in the context of the resources at hand in a manner that is sustainable.
He adds: "We have to at all times continue to review the benefits that we are offering and also consider, within the context of the resources at hand and the sustainability of the fund, what else we can do to benefit our members. One of such, which is a basic right to everyone, is housing. We have seen that only 20% of our members have bonds. As a consequence you have people who are living in sub-standard conditions in the informal settlements.
"So we have to look, within the confines of the act and also within the framework of the rules, at what we can do, and how creatively we can apply our minds to make it possible to have a housing facility and for the members to benefit accordingly.
"It is an issue that the board as well as the Exco has been grappling with for some time. It is not as straightforward as it sounds because the GIPF is a rules-based organisation which means we have to work within the limit and ambit of the rules as well as the Act. We hope that we can find common ground and also a feasible viable framework and formula to make it possible to have a housing facility."
Nuyoma says it does not make sense for the fund to have billions of dollars if it is only for the fund's bank statement to look good while members are living in poverty.
The former Development Bank CEO says it is unfortunate that the GIPF has been viewed in a negative light by the media and the public given the kind of benefits the fund gives to members. He further says: "If you look at it [the fund] within the context of the region and the continent, there are not many countries that have facilities of this nature. Also the manner in which this fund has grown, it is a pity that the growth has not been taken into account in the public discourse.
"We have to reposition the GIPF to where it is supposed to be. It has been unfortunate the way it has been projected. The GIPF is not a failed institution and with that I would like to thank the trustees and the Exco that has been here, for the job they have done to grow the fund from a mere N$800,000 in 1989 to N$55 billion in terms of market value at the end of September 2012. They have done a tremendous job."