The Eskom pension fund ‘is sound and well-managed’

The Eskom Pension and Provident Fund (EPPF) notes with concern your report (on Friday, 10 January 2020), “Eskom is facing another demon in the dark” that expresses “grave concerns around the integrity of the administration system” and “potential collusion” around tender procedures at the fund.

The fund employs an external service provider to deliver a technology platform which enables the fund to administer member pensions and benefits. This provider is appointed through a tender process and its services are procured for a specified period. The contract with the existing service provider will end in April 2020.

In light of the expiring contract, and with a focus on modernising its member administration system, the fund issued a Request For Proposals to the market. The process was undertaken with the aim of improving the processing of benefits, enhancing controls, reducing costs and providing a better service experience to its members. In line with EPPF policies, a procurement process was followed to assess the capabilities of available systems in the market in order to identify one that would suit the Fund’s requirements. This assessment was conducted by a multidisciplinary evaluation team with oversight from independent auditors. The outcome was a collective decision and could not have been based on the preference of an individual.

On conclusion of the procurement process (having considered capabilities, functionality and price), a service provider was selected. We are currently at an advanced implementation stage and are on track to ensure the new system is in place before the expiry of the current contract. As with any system replacement project, there are inherent risks, and these are being mitigated actively.

Contrary to your report, the current administration system has been continually updated as advised by the service provider. Member data is stored and processed within the member administration system. Excel is used mainly to extract information for analytical purposes.

Data quality is the foundation of reliable benefit processing, accurate valuations and audits. Our current processes address these requirements adequately. This is evidenced by the independent audit and actuarial reports that are produced annually; the latest of which indicates that the fund remains healthy, despite a challenging investment climate.

Far from a brewing “horror story” with an administration system “held together with sticky tape and chewing gum”, EPPF is sound and well-managed. We are in the process of migrating from one service provider (Global ASP) to another (EBSphere). EBSphere’s website is fully functional. Your article incorrectly refers to the service provider as Everest Corporate Benefits. (EBSphere is owned by Everest Corporate Benefits — Ed)

The EPPF funding ratio (assets divided by liabilities) for each of the last 10 years has been greater than 100% and as at 30 June 2019 was 115%, which surpasses most pension funds around the world. I assure you, your readers, the South African public and every EPPF member, of the fund’s solvency and liquidity, maintained even in a tough macro-economic environment.

The fund is in a sustained healthy financial position and there is a low risk of Eskom being required to “stand in for what is owed” and an even lower risk of the Fund’s “purse strings being too depleted”. Our members are in no peril of being “left in the dark”.

Your journalist, Ms Ruan Jooste, did contact us (on 8 January 2020) with a request for information about tender notifications on the EPPF website. This query was answered and there were no further inquiries either from her or from Daily Maverick. We are therefore confounded that the aforementioned article included claims about — inter alia — software upgrades at EPPF, and suspicions regarding apparent tender irregularities, as those questions were not posed to the fund. Had these questions been asked, and had these allegations been made, we would have addressed them. This would have pre-empted the publication of an erroneous article.

I thank Daily Maverick for its interest in the affairs and business practices of EPPF. However, we urge Daily Maverick and its journalists to practise due diligence before publishing allegations, suspicions and untruths that impact many and that cause unsubstantiated wide and grave concern. BM

Linda Mateza is chief executive and principal officer of the Eskom Pension and Provident Fund.