South Africa: The PIC Remains a Bystander in Talks to Raid Government Pension Savings for Eskom Bailout

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Taking R250bn out of the R1.8trn worth of pension savings belonging to 1.7m current and retired government employees, which the Public Investment Corporation manages, amounts to a big 13.8% haircut, or potential loss if Eskom fails to pay back the money.

In high-level talks between the government, labour and business about a proposal to bail out debt-laden Eskom using pension savings belonging to government employees, the Public Investment Corporation (PIC) has been relegated to bystander status.

This is despite the proposal - first mooted by Cosatu that involves using R250-billion of pension savings managed by the PIC to pay down a portion of Eskom's debt - having a far-reaching impact on the asset manager and conjuring up fears that good money after bad will be thrown into an unproductive power utility.

The PIC manages R2.13-trillion in government pension savings on behalf of the Government Employees Pension Fund (GEPF), and other social funds including the Unemployment Insurance Fund and Compensation Fund, making it Africa's largest asset manager.

Eskom, which is in a dire financial position with insufficient revenue from electricity sales to service its R460-billion debt and tariffs that do not allow it to recover all costs, said it needs to...

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