Public officers’ pension fund has a large footprint on national economy


The multibillion maloti Public Officer’s Defined Contribution Pension Fund has been in the limelight in recent weeks. Public Eye reporter Mosa Maoeng sat down with its Principal Officer (PO) ‘Mamotlohi Mochebelele to find out correct information about the state of affairs at the Fund.

PE: Briefly give us the background on the establishment of the Fund and its mandate.

MM: The Public Officers’ Defined Contribution Pension Fund (“the Fund”) was established with the promulgation of the Public Officers’ Defined Contribution Pension Fund Act, Act 8 of 2008, effective from 1st April 2008. The primary objective was to provide retirement benefits to permanent and pensionable government employees. Specifically, the Fund pays out benefits upon an employee’s departure from government service due to various reasons such asretirement, resignation, termination, disability or in the unfortunate event of their passing. Additionally, the Fund provides supplementary assurance benefits in cases of death or disability.

This marked a transition from an unfunded defined benefit scheme to a funded defined contribution pension fund, enhancing the financial security and stability for government employees.

PE: Speak to us about the growth of the fund in membership and assets?

MM: When the Fund was established, around 20,500 members within the government’s employ were eligible and subsequently joined the Fund. The government started the Fund with an initial amount of M1.1 billion. Over the past 15 years, the Fund’s membership has grown to 37,644 active members and about 254 pensioners.

Similarly, the Fund’s assets under management have grown to over M11 billion as per our latest investment performance reports. This has been a function of both positive net contributions as well as investment returns. The Fund’s net investment income accounts for just under two-thirds of the Fund’s total asset growth over the past five years. Crucially, for the first time the Government of Lesotho has now committed to address the deficit in this Fund and has pledged to inject at least M200 million annually for the next 10 years. The first tranche has already been paid during this financial year.

Given the Fund’s primary mandate, it is important to also note that over the past five years, the Fund has paid over M1, 5 billion in retirement benefits to members and their beneficiaries.

PE: Recently the Fund hosted the general forum for its members; what was the forum planned to achieve? If you were to give a rating how would you rate it?

MM: As part of the Fund’s current strategic plan, now in its second year of implementation, the Fund intends to prioritise stakeholder management and intensify its stakeholder engagement efforts, with the objective of improving its relationships and share information with its stakeholders, primarily its members.

The Inaugural Annual Member Engagement Forum, held at the beginning of this month, marked the start of increased member engagement and communication in line with our strategy.

The Forum served to achieve several objectives. Mainly, to provide ongoing education in respect of the Fund’s mandate and governance structure, share the Fund’s vision, strategy and goals for the future. The forum also served to give members insight on the financial performance of the Fund. More importantly, the forum served to create a platform for member inputs and feedback on the Fund’s operations and service to them.

We had some hiccups but they were not unexpected as this was the very first step in our stakeholder engagement efforts. Overall, although we were not able to tick all the boxes we had hoped to, we are happy with how the engagement panned out.

As Neil Armstrong once said: “One small step for a man, one giant leap for mankind.”

For us as the Fund, the Board of Trustees, the Executive, and staff, this inaugural annual member engagement forum was an incredible initiative as we embark on a journey to enhance our reputation, build trust, and gain the confidence of all our stakeholders, in particular our members.

In as far as a rating is concerned, that’s for our members to judge. We have shared a post-event survey among our attendees and are currently receiving responses.

PE: How would you characterise the fund’s relationship with affiliate organisations, in particular trade unions?

MM: The Fund views all its members equally, regardless of their affiliations or memberships in various formations. Our commitment remains unwavering; to serve each member in the best way possible. However, we recognize the value of trade unions and similar formations as platforms that facilitate engagement with our members. They provide networks through which we can effectively reach and engage members. It is from these engagements that we receive members’ feedback, which we actively listen to and integrate into our continuous efforts to enhance the member service experience. Our goal is to ensure that every member, irrespective of affiliations, receives the utmost attention and quality service from the Fund.  In the end, “we want to put a happy man on retirement”.

PE: Do you have policies which govern the interactions with unions?

MM: The Fund does not have a policy that specifically governs its interactions with unions. It does, however, have a communications policy that governs its communication and engagement with all stakeholders, including member unions and associations. This policy was revised and approved by the Board of Trustees in 2022 to align with the current strategic direction as it relates to its stakeholder relations.

PE: How does the fund deal with the displayed unhappiness over the agenda by some members?

MM: Engagement! Engagement! Engagement!

There is an adage in business that the customer is always right. We seek to adopt a similar approach in our interactions with our members. And whilst we may not agree with some of the views that were made and how they were conveyed, it is our responsibility to engage with our members, address misunderstandings and provide education, awareness and clarity as necessary.

Let me reiterate this point, the Fund endeavours to enhance its reputation, build trust and gain the confidence of its members. The displayed unhappiness was a sign of members that feel aggrieved by the Fund. We have taken this seriously and we are willing to mend the relationships with all our stakeholders. The dialogue has already started, but we acknowledge that it may take time.

PE: What are the lessons learned during the forum as well as when you were organising it?

MM: Given our huge responsibility to serve, and the size and varied composition of our membership, it was, and will most likely continue to be a challenge for the Fund to identify members who should attend the forum physically while others attend virtually. However, as I indicated earlier, we will continue to explore options to make the Forum as widely accessible as possible.

We are still awaiting feedback from members who attended the forum physically and virtually to share their experience. We believe we will gain eye-opening insights and lessons from the responses once the exercise is complete.

Some of the instant feedback we got from attendees confirmed that different members have different priority interests and sought a different approach from the forum.

Fortunately, we have a plan to address the different information needs of our members through bespoke and improved strategies of engagement. We believe that once these initiatives are in full swing, they will reduce the strain in terms of what members expect to yield from the Annual Forum. Our overall assessment was that the tensions were primarily on account of information asymmetries between members and the Fund.

PE: Do you foresee that kind of forum taken to members at the districts level.

MM: We see the Forum evolving, incorporating inputs and feedback from all parties involved. In fact, at the end of the forum, our organising team was already coming up with ideas on how we can improve future fora, making it more accessible for our members.

Our move to stream this 1st edition online and via radio broadcast was one way we thought we could increase coverage for our membership.

Moving forward, we are open to exploring different avenues to make the forum as inclusive as possible for our members and that may include regional and/or district fairs.

PE: What is the difference or uniqueness of the Fund compared to other pension schemes?

MM: What distinguishes our Fund from other pension schemes is its position as the largest pension fund in the country, both in terms of membership numbers and assets under management. The Fund operates as a creature of statute, governed jointly by the founding Act and the regulatory framework outlined in the Pension Funds Act of 2019.

The Fund operates as a hybrid scheme, encompassing both Defined Benefit and Defined Contribution elements. For this reason, our members who were employed before 2008 enjoy a unique entitlement of a minimum benefit guarantee under the Fund based on the government’s previous pension arrangement.

PE: How does the Fund relate with the government of Lesotho?  Does the GoL have a direct control over the affairs of the fund and what are the implications?

MM: The government appoints its representatives to the Board as the employer and sole sponsor of the Fund. This is as mandated by the founding Act which prescribes the composition of the Board of Trustees that oversees the management of the Fund. It is important to note that while the employer representatives sit on the Board, the decisions made are collective and independent, always prioritizing the best interests of the Fund and its members. Further, the Act also outlines a reporting mechanism that directs how the Fund should report to the Government through the Minister of Finance. This reporting framework ensures transparency and accountability while maintaining the Fund’s autonomy in decision-making processes.

PE: How does the Fund’s assets influence and affect the economy of Lesotho?

MM: Over the past 15 years, the Fund has invested over M1 billion in the country. A portion of this has been through the capital markets, where the Fund remains an active participant in the development of our local capital markets. The Fund has also invested significantly into the real economy, facilitating the growth and development of our retail industry (shopping malls), the agri-processing and aquaculture industries, as well as the burgeoning medicinal cannabis industry. We continue to actively assess more opportunities for viable local investments.

While we are cognisant that the Fund can do more, and I can assure you that the Fund is committed to investing more assets in the local economy moving forward, we are proud of the recognisable impact the Fund has and continues to make in Lesotho. Any time I see a job advertisement from one of our investee companies, it gives me a warm feeling inside.

Leave a Reply

Your email address will not be published. Required fields are marked *