Cape Town - Cosatu, the labour federation, yesterday received a tongue-lashing from treasury officials for seeking to delay the passing of the Public Investment Corporation Bill, with parliament's portfolio committee on finance eventually deciding to seek its own legal opinion.

Treasury director-general Lesetja Kganyago and Public Investment Commissioners (PIC) chief executive Brian Molefe were scathing about the attempt by Cosatu to have the bill referred back to Nedlac, the bargaining chamber, to ensure that state pension funds are not put at risk by transforming the PIC into a corporation.

Cosatu's concerns, they said, were based on "a grave misunderstanding" of what the bill proposed, the role of the commissioners and the accountability of the corporation to its clients, the biggest of which is the Government Employees' Pension Fund.

The PIC, which has R309 billion assets under management, was the biggest institutional investor in the country, and the funds would continue to be invested according to the mandates provided by the 42 pension funds that trusted it to manage their funds.

Molefe said the funds could choose other fund managers, but the PIC charged the lowest commissions and was therefore preferred over commercial fund managers.

It also had R91 million in operational assets, and it was only out of these that dividends would be paid to the state once the PIC was corporatised, and not out of total funds under management, as alleged by Cosatu.

Cosatu had claimed that the bill had been rushed through parliament without adequate consultation with Nedlac, but Badian Maasdorp, the PIC's legal adviser, said that such consultation had not been necessary as the bill would have no effect on social and economic policy or labour legislation. All the necessary procedures had been adhered to to get public comment on the bill when it was tabled, he said.

Committee members were also uncomfortable with Cosatu's bid to refer a bill that had already been tabled in parliament back to Nedlac, but agreed they would seek their own legal opinion on whether this was necessary.

Kganyago and Molefe rejected allegations that the bill aimed to merge the PIC and the Government Employees' Pension Fund and Kganyago was sharply critical of Cosatu's attempt to reintroduce the debate on whether the state should have a pay-as-you-go or funded pension fund, something that had been settled several years ago.

Changing the current funded approach would have "huge financial and fiscal implications" but that debate did not belong to the debate on this bill.

Cosatu had said that it wanted the R309 billion managed by the fund to be used to repay apartheid debts, which have mostly been settled, and for accelerated social delivery.

After the PIC briefing yesterday, Elroy Paulus, the Cosatu parliamentary officer, said Cosatu now agreed that a move back to the pay-as-you-go pension fund would not be the best move.