PIC Core Business

What differentiates the PIC from other asset managers in the South African marketplace?

While other asset management companies serve the financial needs of the general public and the private sector, the PIC is dedicated to fulfilling public sector needs. Over the years, we have built up systems and skills that complement those of our public sector clients, who also benefit from management costs that are generally below prevailing market rates.  It is also worth noting that the PIC has dual mandate, to generate returns on behalf of clients and to contribute to the developmental goals of South Africa.

Does the PIC only manage public sector funds or does it also operate in the private sector?

PIC only manages funds deposited by public sector clients. However, not all public bodies are PIC clients. For example, we do not manage the pension funds of municipal/local government employees, as these are managed by private sector fund managers.  However, PIC’s founding Act, the Public Investment Corporation Act of 2004 empowers the corporation to approach these entities and provide asset management service on their behalf.

Do any other countries have organisations similar to PIC that manage public sector funds?

Internationally, there are many companies that are similarly structured, but may have slightly different investment areas. It depends on their mandates as well as the historical, political and economic realities of the country concerned.  Examples of similar public sector fund managers include the Namibian Government Institutions Pension Fund, the Zambian National Pension Scheme Authority, the Nigerian Social Insurance Trust Fund, The California Public Employees Retirement System in theUnited States and the Queensland Investment Corporation inAustralia.

Does PIC manage all of their clients’ assets internally?

PIC uses a combination of internal and external fund management, as follows:

  • Fixed Income Investments: all assets are managed internally.
  • Equities: 80% of assets are managed internally and 20% externally.
  • Properties: Asset management, development management and property finance are managed internally. Property management companies are appointed to perform functions such as rent collection, debt management and property maintenance.
  • Isibaya Fund: Investments are managed internally or indirectly through investments in other private equity funds.

How are external asset management companies appointed and how does PIC manage their performance?

Formal tender processes are used to select external fund management companies that, once appointed, are expected to meet specified performance standards and service levels.

PIC Legal and Regulatory Framework

Is the PIC a government enterprise? To what extent is it autonomous of government?

The PIC is a public sector institution, wholly owned by the South African government with the Minister of Finance as the shareholder representative. However, the PIC is not a government department but a corporation with its own Board of Directors, which is responsible for controlling the PIC’s business and operations. The Board has a high level of autonomy, as outlined in the Public Investment Corporation Act and as contemplated in the Companies Act of 2008.

What are the criteria for selecting PIC Board members?

The Minister of Finance appoints members of the Board in consultation with the Cabinet. PIC clients also make nominations to the Board and the Minister must, according to the Act, “have due regard” to such nominations. The Act stipulates that members of the Board must be appointed on the grounds of their knowledge and experience, with due regard to the Financial Advisory and Intermediary Services (FAIS) Act.

Seeing that PIC provides asset management services, is the corporation a registered financial services provider?

Yes.  The PIC is registered with the Financial Services Board (FSB).

What requirements must the PIC meet to qualify as a financial services provider registered with the Financial Services Board (FSB)?

There are a number of requirements, some of the most important being:

  • Holding an FSB-issued licence as an authorised financial services provider
  • Operating under client mandates that comply with FSB requirements
  • Appointing a dedicated compliance officer to monitor PIC’s compliance with the Financial Advisory and Intermediary Services (FAIS) Act
  • Appropriately qualified personnel
  • Meeting specific accounting and auditing standards
  • And operating under FSB-approved client investment mandates.

The PIC is accountable to Parliament for financial management. What does this mean in practice?

At the end of the PIC’s financial year on 31 March, our annual financial statements are submitted to the Auditor-General for auditing, with the aim of verifying that the PIC’s spending is fair, reasonable and authorised. The Auditor-General’s opinion of the annual financial statements is tabled before Parliament as part of the PIC’s annual report. This report must be tabled within five months of the financial year-end, in accordance with the Public Finance Management Act.

Is the PIC compelled to comply with the Pensions Funds Act or any Act of Parliament?

Yes. As a pension fund manager, the PIC must comply with the relevant sections of the Pensions Funds Act, as well as other applicable laws.


Does PIC pay dividends to its shareholder?

Yes, if the PIC Board of Directors authorises a dividend payment and the Minister of Finance, as shareholder representative, approves it.

How does PIC report to its shareholder and about what issues?

PIC has regular interaction with the shareholder on issues as decided by the Board and the shareholder from time to time.

Can the shareholder sell some of their shareholdings in the PIC to a third party?

No. The government may not dispose of its shareholding unless Parliament passes an Act allowing for this.

Can the shareholder access any of the assets managed by PIC, such as to finance a budget deficit?

No, all assets under management belong to PIC’s clients and may not be used for any purpose other than to  benefit clients. The shareholder is only entitled to dividend payments, which must first be authorised by the PIC Board of Directors and approved by the Minister of Finance.

What obligations and responsibilities does government have as PIC’s shareholder?

The shareholder has given certain guarantees regarding the Government Employees Pension Fund, which is PIC’s largest client. This is because the GEPF is a defined benefit pension fund, meaning that its members are entitled to their benefits regardless of the performance of PIC in managing their funds. In the event of a shortfall between the defined benefits and available funds, the shareholder guarantees to bridge the shortfall.


Can any of PIC’s clients use the services of another asset manager or are they required to use PIC?

Some clients are required by their founding legislation to invest through the PIC while others are not. However, the PIC does not view or treat clients as a “captive markets”.

We are committed to providing a client-centred service by ensuring that our clients drive all investment decisions (through their investment mandates), receive regular updates on the performance of their portfolios and have unlimited access to relevant staff.

What recourse do clients have in the event that they are dissatisfied with the corporation’s performance in managing their assets?

Clients can approach the Financial Services Board (FSB), which has mechanisms in place to investigate complaints about any registered financial services provider.

Most of the money invested by PIC belongs to workers. Do they have a say in how the money is managed?

Workers have a say in how the money is managed by virtue of their trade union membership. For instance, in the case of the GEPF board of trustees, trade unions are represented on a 50-50 basis with employer representatives.

This means that trade unions are part of the process of setting the mandate provided to PIC.

In addition, PIC also engages trade unions and other social representatives from time to time so that we can better understand the needs of our clients.

Does PIC charge clients for services rendered and if so, how are these charges set?

Yes, clients pay management fees to PIC for our services. The fee structure is agreed on in negotiations between PIC and our clients. Generally, PIC fees are significantly lower than prevailing market rates.

Black Economic Empowerment (BEE)

In terms of investments, what is the most important consideration, return on investment or contributing to empowerment and development goals?

PIC’s primary responsibility is to prudently manage clients’ investments and deliver returns that meet but preferably exceed client mandates. That said, we do not believe that return on investment and empowerment are mutually exclusive. As can be seen from PIC’s returns investments in township property developments, empowerment-oriented investments make sound business sense while also contributing to socio-economic transformation.

Is PIC involved in any BEE projects?

Through the Isibaya Fund, the PIC is a major funder of empowerment transactions.

What about other investment classes? For instance, does PIC consider empowerment issues when investing in equities?

Yes, as a major investor on the JSE Limited, PIC practices a policy of shareholder activism. Our aim is to ensure that the entities in which we invest on behalf of our clients are well managed, accountable and transformed. PIC representatives attend all annual general meetings of such organisations and actively focus on issues of importance to shareholders, including transformation. In addition, PIC has led a number of public debates on corporate governance matters and participated in the development or refinement of various sector Charters on black economic empowerment.

Investment Criteria

What criteria are used to invest funds deposited with PIC?

The following criteria are used:

  • The Client Mandate: The PIC only invests in areas and instruments which are approved by the client.
  • Client Liability Structure: The client informs PIC of its liabilities so that investments can be structured to ensure the money is available when needed.

We do not make investments in the gaming or gambling sector.

Who determines PIC’s investment policy: government or the PIC itself?

The PIC’s investment policy is determined by the mandates we receive from our clients and its implementation is overseen by the Board of Directors.