PIC may be tapped for health funding

• Using national savings pool under consideration, health minister says

The health department and the National Treasury are discussing the possibility of tapping into SA’s R2.7-trillion savings pool to fund the upgrading of public health infrastructure.

This is as the health department prepares for the implementation of National Health Insurance (NHI), a sweeping overhaul of the country’s healthcare system that has polarised policymakers, economists and corporate executives. President Cyril Ramaphosa assented to the legislation on May 15, but the act has yet to be brought into effect as none of its sections have been promulgated.

In a written reply to a parliamentary question by DA MP Michéle Clarke, minister of health Aaron Motsoaledi said there was “work in progress” regarding tapping into the national savings pools to fund public health infrastructure.

Enlisting the Public Investment Corporation (PIC), Africa’s largest fund manager with R2.7-trillion in government employee pensions under its custody, could potentially be held up as evidence by critics of the NHI that the biggest health reform since the end of apartheid is unaffordable and a burden to pensioners.

Still, the idea of using the PIC funds to prop up public health may fall within its mandate, which includes pumping money into projects with positive social impact on condition that specific investment decisions comply with relevant pension regulations and guidelines.

Should the government want the PIC to pump more money into health infrastructure, the move is likely to require amendments to the Pension Funds Act, which sets the maximum level that pension funds and life insurers can hold in asset classes such as property, government bonds and listed shares, but does not prescribe minimum investments in asset classes.

Discussions between the PIC and the health department about funding began a decade ago. The department realised that

“have private hospitals good facilities because, among others, they are funded by the PIC — we wanted the same treatment for the public healthcare sector,” Motsoaledi said.

The Treasury was however not a part of these discussions.

Motsoaledi said at the government of national unity’s first cabinet lekgotla in July that the National Treasury hinted “that among the sources of funding for infrastructure for the public health sector will be the PIC”.

Motsoaledi then asked the Treasury officials if they had changed their minds, as he had already asked for the same before and their response was that a meeting must be convened to discuss this.

Business Day previously reported PIC chair and deputy finance minister David Masondo rejected considerations to permit pension funds and other asset managers to finance public health infrastructure. The pension fund industry comprises R4-trillion in retirement savings, more than half of which is in the custody of the state-owned PIC.