Government plans to tap public pensions for NHI – yours may be next

The Department of Health has made a proposal to the National Treasury to use savings managed by the Public Investment Corporation (PIC) to build and upgrade public infrastructure in anticipation of the National Health Insurance (NHI) scheme. 

A major sticking point in the plan is that the vast majority of the PIC’s funds are made up of the pensions of government employees, meaning that it is mandated to ensure it generates a reasonable return on its investment. 

It is unclear how the funds used to build public healthcare infrastructure would generate a return for pensioners. 

Health Minister Dr Aaron Motsoaledi explained to Newzroom Afrika that the department needs significantly more funding for infrastructure than it is allocated. 

Due to the government’s poor financial health, it has been forced to devise alternatives to requesting additional funds from the National Treasury. 

Motsoaledi said the department has taken cues from private hospitals, which have used investments from the PIC to build their infrastructure and acquire equipment. 

“Why can’t the same be done for public hospitals? We argued that the PIC money would be used to build the infrastructure we need now, and funding from the National Treasury as part of our budget would be used to pay back the PIC over a period of 20 to 30 years,” he said.

When pressed about how a return would be generated on these investments for the PIC and the pensioners’ money investment, Motsoaledi said those are technical details that would be ironed out later. 

“We know the money is not free and that it belongs to pensioners. When they retire, they must get that money. We will be able to pay it back,” he said.

“We never said it would be free money, so there would be a return on investment. Only because these are public funds, it should not be excessive. That is our argument.” 

Motsoaledi also said the funds would be ringfenced for facilities – infrastructure and equipment – and will not be used to pay salaries. 

His team met with the National Treasury a month ago to present proposals and expects the Treasury to revert back in the near future. 

There are fears that the government may look beyond the PIC for funding to gear up for the NHI’s implementation. 

Motsoaledi himself seemed to stoke these fears by saying that plans are being made to examine “the whole spectrum of lenders, including commercial banks and international institutions”. 

“As long as we get money to invest in health infrastructure, we are happy. It is just our proposal that it must be the PIC. If you find any other source as the Treasury, it is fine.” 

Institute of Race Relations analyst Marius Roodt said that the department is considering using these funds for the NHI, and the government has no idea how the scheme will be funded. 

“The fact that the health department is now looking to the assets of the PIC to potentially fund the NHI shows that the government still has no idea how it’s going to fund it,” Roodt said in a statement. 

“It is only through raids like these or through large, unsustainable tax increases that NHI can be funded, and neither is a good solution.”

Roodt explained that if the PIC’s assets are being considered, it would not be surprising if the government started considering other pension funds to help pay for the NHI. 

“The issue of prescribed assets – where pension funds are forced to put money into certain assets – is something that the ANC perennially raises,” he said.

“Do not be surprised if the ANC starts looking to private pensions as a possible funding source for NHI. Senior health department officials have made it clear that they view the savings that South Africans have in private medical aids as something the government should have access to in order to fund the NHI.” 

“Nobody is opposed to ensuring that all South Africans can access good quality healthcare, but the NHI will not ensure that. It will destroy that which works and not fix that which is broken.”