Issue: December 2006/ January 2007

First Word

There’s an important difference between our new best friend and ourselves. It’s that the Chinese save and we don’t. A basic reason for their growth is not to be envied but emulated, if only we could change our spendthrift mindset. Read full article...

Pension Funds Act

Proposed amendments go much further than mere tinkering and plastering. They seem to have been hurriedly prepared, putting a lot more power into the hands of the Registrar and the Adjudicator to surmount their immediate problems. Several proposals appear to pre-empt the holistic review awaited from National Treasury. Read full article...

Surplus Apportionment

The High Court judgment over a Sanlam pension fund throws surplus-apportionment schemes into total confusion. Many funds’ sponsoring employers will welcome the court’s decision, because it lets them off the hook for millions of rand, but it’s still too soon for them to breathe easier. The Registrar has been granted leave to appeal.

Cover Story

So large and powerful is the Government Employees Pension Fund that its sneeze can cause others, including JSE-listed companies, to catch cold. For the first time, it has a board of trustees representative of stakeholders that has appointed its own chief executive. He and the recently appointedchairman outline what’s in store.

Fund Ethics

The giving of gifts and hospitality by fund managers to trustees has become absurd. Stringent guidelines are needed to curtail it if good governance is not to be corrupted. The fault does not lie with fund managers alone.

This & That

On a global count, the JSE is not doing terribly well. Measured in dollar returns, its performance lags behind competitors for foreign investment. This goes to illustrate our continued vulnerability to currency risk and reliance on commodities.

Big Issue

Powerful trade unions are in the forefront of opposition to attempts by the South African Local Government Association for creation of a super-sized retirement fund that will embrace all municipal employees. It’s not at all clear why the fund’s proponents are going to extraordinary lengths to impose it.

Court Cases

The outcome of the long-awaited “Ghavalas trials”, both criminal and civil, are not at all cut-and-dried. There’s no question that the involved parties had been trying to access the surpluses of defined-benefit funds. The question is whether, and when, their efforts crossed the line from legality to illegality. If there was fraud, was it exclusively fraud on the Registrar?

Corporate Governance

Here’s a new line for controversy. It’s in the interest conflicts that can arise for asset managers between the houses that own them and the clients they serve. By highlighting the short-termism in “flipping” portfolios to generate fees, experts abroad have spoken the unspoken.

Prescribed Assets

Say no to Blade. The Communist Party official is hammering at an open door when trying to promote socially responsible investment (SRI) by threat. There’s plenty of money being poured into SRI profitably, unlike previous experience of government forcing it unprofitably and wastefully onto retirement funds.

Service Providers

There is a case to be made for one-stop shops, provided trustees properly understand the relationship with their service providers and are able effectively to manage the risks in this arrangement.


Top institutions take on a top multinational in a precedent-setting US law suit over executive pay. Locally, there’s never been a similar class action although the Supreme Court of Appeal some years ago gave a thumbs-up for the principle.


Retirement at age 65 is a Bismark red herring.