Issue: April/June 2010
Here’s the bark. Where’s the bite?
The labour federation is determined to remain “revolutionary”. Resolutions taken at its national congress spell out what it means for pension funds. Or rather, what it would mean if the leadership has its way.
Every three years Cosatu holds a national congress. At its most recent, late last year, resolutions were taken that are important reflections of its thinking on retirement funds. Some are a little frightening, if not unexpected and on occasion perhaps not unwarranted, for the frustration and mistrust they convey. Several appear to derive from ideological conviction, as in unions’ attempts to control the assets of pension funds, that the labour federation can conceivably bring to bear on national policy.
Here are examples from the transcript, quoted verbatim but in summary, with the more obvious typographical and other errors corrected. TT resists the temptation to comment.
On trustee training:
It is therefore resolved that trustees be made aware of the pensions legislation but encourages them to carry out their duties with due care. Expert advice on its own is not detrimental to members’ interests, but it becomes dangerous if trustees entirely rely on experts especially on basic issues rather than specialised knowledge. The union must play a role in ensuring that asset managers, who want to provide training, focus on soft and core issues.
As a transition phase, the union education departments may outsource trustee training but work towards providing it themselves. The training must empower trustees to deal with all challenges which are confronting trustees like governance, risk and return etc.
On surplus distribution:
It is therefore resolved that the unions celebrate the victories by ensuring that former fund members benefit from the distribution. Shop stewards, trustees, local offices and funds must embark on a massive publicity campaign for maximum distribution. We must make sure that employers are not even getting a cent out of the surplus money.
It is therefore resolved that no service provider has the right to negotiate any bulking service or benefit without the knowledge of trustees and shop stewards. Any benefit negotiated in the name of funds must accrue to the fund members. Service providers must declare to the trustees all business interests which relate to the funds.
On trustees’ terms of office:
It is therefore resolved that Cosatu proposes amendments to the Act whereby the term of office is limited to four years and that trustees may be “recalled”. Also, the election of trustees in all funds must take place at the same time “like shop stewards”.
On trustee independence:
It is therefore resolved that unions must continue to play a revolutionary role given that there is an imbalance in the whole social security system. Legislation must give unions space to participate in the retirement industry by allowing union representation on the funds. Individuals seconded to funds must account to union structures and be subjected to union recall and accountability.
On socially-responsible investment:
It is therefore resolved that Cosatu will encourage its affiliates to achieve the 5% within 36 months. An institution will be investigated to assist. It may be the Unity Corporation, or establish an SRI desk or even use Kopano Ke Matla or one of the affiliate investment companies (e.g. Numsa Investment Company).
On black economic empowerment:
It is therefore resolved that 25% of assets under management be transferred to black-owned companies by 2011.
In a Business Report article, Cosatu national spokesperson Patrick Craven attacked TT for having argued that the labour federation should not duck from public debate on retirement-fund issues and that it should practice the same public accountability it demands of others (TT Sept-Nov ’09).
Amongst other things, he contends that the TT argument makes “outrageous claims” and contains “glaring inaccuracies”. These are contentions that can equally be thrown back at Craven. He also says that TT “promotes the views of the retirement funds industry and service providers and is of little use to member-elected trustees whose interests Cosatu is committed to promoting and protecting”.
Craven is entitled to his viewpoint. It can be accessed on the BR website (www.busrep.co.za) by using keywords ‘Greenblo’ and ‘Craven’.