By now we all know just how deep in the hole Eskom is, standing head and shoulders above our other state-owned enterprises (SOEs) in terms of utter incompetence.

That takes some doing, considering we are also blessed with the SABC and South African Airways, but the staggering sums being thrown around show that Eskom’s ineptitude may well have a massive impact on the lives of everyday South Africans.

Take for example the announcement made last week that the Government Employees Pension Fund (GEFP) would be ‘investing’ R5 billion in Eskom. aimed at helping the SOE pay their bills until the end of February.

R5 billion is hefty, but we have grown used to this. Cough cough – here’s Business Tech:

Despite the injection, however, Eskom still needs to make up the remaining R20 billion it needs to keep its head above water until the end of March 2018 – on top of the R360 billion debt the group is already carrying, of which more than R200 billion is guaranteed by the government. This places the economy at extreme risk if ever recalled by lenders.

R360 billion in debt – that’s truly frightening. They can get out of that hole by borrowing from the International Monetary Fund (IMF), which will come with many stringent terms and conditions, or they could go one worse.

It’s the second option that economist Mike Schussler fears:

“The fear I have is that they use our pension fund savings,” Schussler said.

“South Africa has the fifth-largest pension fund savings in the world as a percentage of GDP. The pension pot is also the eighth-biggest in dollar terms in the world. This pension pot belongs to about 12 million South Africans, and we already tell them how they can invest it.”

Schussler noted that, while the pension fund is regulated – dictating how the money can be invested and where – these regulations can be changed on a whim, and don’t need to pass any parliamentary or legal muster.

If government starts dipping into the pensions, he said, it can ‘hide’ many financial issues from the general public, avoiding the shame of going to the IMF – but it would not last, and many would find themselves all the poorer when they retire.

Once again, it’s the people on the street left to pick up the pieces.

I’m no investment guru, but when you see news like this it makes having your finances handled by trusted experts all the more appealing.

The 2OV crew has been making use of Consequence Private Wealth since their founding back in 2010, and they’ve always kept things nice and simple:

• The most valuable advice is given from an objective viewpoint. Full independence from all product providers is crucial.
• In a tough economy it’s worth analysing costs closely. We ensure you understand all your financial fees.
• Clients are put off by overly complex products and explanations – we keep it clear and concise.
• We stay in touch. We review annually but are available  to discuss all client items at any point as required.

And you can avoid dodgy folks dipping into your savings to bail out the likes of Eskom.

Rest a little easier and let the pros handle these calls, because the consequences of decisions made today will unfold over a lifetime based on the sound principles applied at their inception.

As for Eskom? What a mess they’ve made.

[source:bustech]