14
AVR
AVR
The Private Affairs of Public Sector Pensions in South Africa
Conférence
Ouvert au grand public
14.04.2015 17:15
Présentiel
Toward the end of its rule, the apartheid government in South Africa converted its contributory pension system for employees in the public sector from one that effectively functioned as a pay-as-you-go (PAYG) scheme to a fully funded scheme. This paper explains the reasons behind this change and reveals both its contemporary consequences within the context of the enormous development challenges facing South Africa, as well as the inadequacy of the social policy responses of the democratic government. The most far-reaching effect of the adoption of a fully funded pension scheme is that it led directly to a dramatic increase in national debt, as the public servants of the previous regime consciously indebted the state in order to safeguard their own pensions and retrenchment packages in retirement.
Unlike other indebted governments, the major portion of national debt in South Africa is internal rather than external. In effect, the government is indebted to itself through the fully funded pension system, as the transition from a PAYG system to a fully funded one implied that former contributions to the public pension schemes had to be securitized via government bonds that were deposited in the newly created pension fund. Furthermore, contributions of current employees were directed into the pension fund while current pensions had to be financed out of the budget. This costly transition had detrimental implications for social investment, especially in the areas of education, health and welfare.
This paper argues that the policy choices in respect of the pension system have profoundly shaped the overall economic prospects of the country. In so far as the levels of inequality in South Africa pose the greatest threat to the democracy, these policy choices have had contradictory effects. On the one hand, a progressive agenda involving social spending and dealing with poverty through non-contributory public pensions has certainly benefited many poverty-stricken black South Africans. On the other hand, the fully funded system of contributory pensions for workers in the state sector has had the dual effect of entrenching the deals made with senior public officials of the apartheid government, as well as enriching a very small group of black entrepreneurs who have profited directly from the centralized asset management of public pension funds. It is crucial for the government to negotiate this tension in a manner that allows for social policies which encourage economic growth while simultaneously maintaining the social imperative of redistribution. The exigencies of legitimacy and consent demand the latter: in South Africa, precisely because of the extent of inequality and the manner in which the differentiation between rich and poor continues to correspond with the division between black and white, redistribution is all the more urgent.
In broad terms, this paper deals with the interconnections between public debt, contributory pensions in the public sector, the corporatization of the management of these public funds, the contradictions of Black Economic Empowerment, and the failure of South African social policy in respect of contributory public pensions to deal more comprehensively with its development challenges.
The paper starts by describing the political and institutional evolution of South African pension schemes with a special focus on the reform of contributory public pension schemes toward the end of apartheid. It goes on to examine the governance structure of the pension system in order to establish whether it is transparent and accountable, while ensuring that the pension system is able to pursue its main roles of social protection, redistribution and contribution to economic development and social cohesion. In particular, the paper investigates the institutions that serve public pensions, such as the GEPF and the Public Investment Corporation (PIC). There can be little doubt that the PIC opens up possibilities for accomplishing social goals through an appropriate investment strategy. However, its recent corporatization pushes it toward privatization. While the PIC is still wholly owned by the state, it is an entity that formally exists outside of the public sphere and therefore beyond its oversight. Finally, the paper analyses the investment policy of the public pension fund, paying special attention to whether this fund has been invested to build economic and social infrastructure.
Unlike other indebted governments, the major portion of national debt in South Africa is internal rather than external. In effect, the government is indebted to itself through the fully funded pension system, as the transition from a PAYG system to a fully funded one implied that former contributions to the public pension schemes had to be securitized via government bonds that were deposited in the newly created pension fund. Furthermore, contributions of current employees were directed into the pension fund while current pensions had to be financed out of the budget. This costly transition had detrimental implications for social investment, especially in the areas of education, health and welfare.
This paper argues that the policy choices in respect of the pension system have profoundly shaped the overall economic prospects of the country. In so far as the levels of inequality in South Africa pose the greatest threat to the democracy, these policy choices have had contradictory effects. On the one hand, a progressive agenda involving social spending and dealing with poverty through non-contributory public pensions has certainly benefited many poverty-stricken black South Africans. On the other hand, the fully funded system of contributory pensions for workers in the state sector has had the dual effect of entrenching the deals made with senior public officials of the apartheid government, as well as enriching a very small group of black entrepreneurs who have profited directly from the centralized asset management of public pension funds. It is crucial for the government to negotiate this tension in a manner that allows for social policies which encourage economic growth while simultaneously maintaining the social imperative of redistribution. The exigencies of legitimacy and consent demand the latter: in South Africa, precisely because of the extent of inequality and the manner in which the differentiation between rich and poor continues to correspond with the division between black and white, redistribution is all the more urgent.
In broad terms, this paper deals with the interconnections between public debt, contributory pensions in the public sector, the corporatization of the management of these public funds, the contradictions of Black Economic Empowerment, and the failure of South African social policy in respect of contributory public pensions to deal more comprehensively with its development challenges.
The paper starts by describing the political and institutional evolution of South African pension schemes with a special focus on the reform of contributory public pension schemes toward the end of apartheid. It goes on to examine the governance structure of the pension system in order to establish whether it is transparent and accountable, while ensuring that the pension system is able to pursue its main roles of social protection, redistribution and contribution to economic development and social cohesion. In particular, the paper investigates the institutions that serve public pensions, such as the GEPF and the Public Investment Corporation (PIC). There can be little doubt that the PIC opens up possibilities for accomplishing social goals through an appropriate investment strategy. However, its recent corporatization pushes it toward privatization. While the PIC is still wholly owned by the state, it is an entity that formally exists outside of the public sphere and therefore beyond its oversight. Finally, the paper analyses the investment policy of the public pension fund, paying special attention to whether this fund has been invested to build economic and social infrastructure.
Quand?
14.04.2015 17:15
Où?
Organisation
Intervenants
Fred Hendricks, Dean Rhodes University, Grahamstown (South Africa) / visiting researcher ZASB, Basel
CYCLE d'événements:
Wohlfahrtsregimes in Entwicklungsländern
Lange Zeit wurde davon ausgegangen, dass in Entwicklungsländern sozialer Schutz (social protection) hauptsächlich durch nicht-staatliche Akteure wie familiäre, religiöse und nachbarschaftliche Netzwerke bereitgestellt wird und dies durchaus mit Geschlechter- und anderen Ungleichheiten einhergeht. In Afrika wurden teilweise bereits im Rahmen des Kolonialismus für einen kleinen Teil der Bevölkerung Instrumente der sozialen Sicherheit nach europäischem Modell eingeführt, um die Risiken des Alters, der Arbeitslosigkeit und von Krankheit abzufedern. Lateinamerika ist die Entwicklungsregion der Welt, deren Entwicklung den stärksten Schub an Implementierung solcher Instrumente erfahren hat. Die eingeführten Instrumente sozialer Sicherheit basierten auf der Arbeit des meist männlichen Ernährers im formellen Wirtschaftssektor und waren deshalb in Entwicklungsländern nicht generalisierbar. Denn in diesem Kontext sind – grob vereinfacht zusammengefasst – der urbane informelle Sektor und die Subsistenz- und Agrarwirtschaft bedeutender als der formelle Wirtschaftssektor. Die hohe Arbeitslosigkeit bzw. Unterbeschäftigung, eine Unterversorgung mit Humankapital sowie weitere ökonomische, soziale und politische Faktoren haben zu einer Häufung von Risiken wie Armut, Unterernährung oder Krankheit geführt. Diese werden durch spezifische Unsicherheitsfaktoren wie Naturkatastrophen oder bewaffnete Konflikte noch verstärkt.
Eine zunehmende Zahl von Forschungsarbeiten dokumentiert und analysiert, wie früher (Lateinamerika) oder später (Afrika) ein Ausbau von staatlichen und nichtstaatlichen Leistungen im Bereich der sozialen Sicherheit eingesetzt hat. Diese Leistungen richten sich an bestimmte Altersgruppen oder Formen der Bedürftigkeit (z.B. Alte, Kinder, schwangere Frauen), oder streben universelle Zielvorgaben an (z.B. medizinische Grundversorgung, universelle Altersvorsorge). Sie werden von internationalen Organisationen, aber auch makroregionalen Faktoren beeinflusst. Die Leistungen von Staaten, Märkten, Haushalten und Nichtregierungsorganisationen führen so zu spezifischen Formen von Wohlfahrtsmixen.
Diese Vortragsreihe widmet sich diesen Wohlfahrtsregimen in Entwicklungsländern. Sie beginnt mit einer Einführung in das Thema, in der Konzepte, Modelle und Typologien sowie Theorien vorgestellt werden. Jeweils nach einem Überblick werden dann zwei Bereiche der sozialen Sicherheit (Versorgung im Alter und Gesundheit) mit Fallstudien aus Afrika und Lateinamerika vertieft diskutiert. Dabei wird gefragt, wie die entsprechenden Sicherungssysteme organisiert werden sollen, wer die entsprechenden Dienstleistungen anbieten soll (Staat, Private), wie sie finanziert werden sollen (steuerbasiert, beitragsbasiert) und was ihre Auswirkungen auf die individuelle und gesamtgesellschaftliche Wohlfahrt und soziale Ungleichheiten sind.
Autres événements dans le cycle
Eine zunehmende Zahl von Forschungsarbeiten dokumentiert und analysiert, wie früher (Lateinamerika) oder später (Afrika) ein Ausbau von staatlichen und nichtstaatlichen Leistungen im Bereich der sozialen Sicherheit eingesetzt hat. Diese Leistungen richten sich an bestimmte Altersgruppen oder Formen der Bedürftigkeit (z.B. Alte, Kinder, schwangere Frauen), oder streben universelle Zielvorgaben an (z.B. medizinische Grundversorgung, universelle Altersvorsorge). Sie werden von internationalen Organisationen, aber auch makroregionalen Faktoren beeinflusst. Die Leistungen von Staaten, Märkten, Haushalten und Nichtregierungsorganisationen führen so zu spezifischen Formen von Wohlfahrtsmixen.
Diese Vortragsreihe widmet sich diesen Wohlfahrtsregimen in Entwicklungsländern. Sie beginnt mit einer Einführung in das Thema, in der Konzepte, Modelle und Typologien sowie Theorien vorgestellt werden. Jeweils nach einem Überblick werden dann zwei Bereiche der sozialen Sicherheit (Versorgung im Alter und Gesundheit) mit Fallstudien aus Afrika und Lateinamerika vertieft diskutiert. Dabei wird gefragt, wie die entsprechenden Sicherungssysteme organisiert werden sollen, wer die entsprechenden Dienstleistungen anbieten soll (Staat, Private), wie sie finanziert werden sollen (steuerbasiert, beitragsbasiert) und was ihre Auswirkungen auf die individuelle und gesamtgesellschaftliche Wohlfahrt und soziale Ungleichheiten sind.
Autres événements dans le cycle
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