BL Premium reports that one of SA’s largest fixed-income lenders says any attempt by the government to force pension funds to invest in bankrupt state-owned companies (SOEs) is likely to spark a Constitutional Court (ConCourt) challenge.  

In its election manifesto released at the weekend, the ANC said it would "investigate the introduction of prescribed assets on financial institutions’ funds to unlock resources for investments in social and economic development".  This could result in pension funds being forced to invest a portion of their funds in state projects.  Prescribing to pension funds, which are responsible for managing the savings of millions of workers, would be destructive and panic-inducing, said Andrew Canter, chief investment officer at Futuregrowth Asset Management.  Such a move, Canter said, would also amount to a violation of property rights and would probably end up in the ConCourt.  But, constitutional law expert Pierre de Vos said it was not as clear-cut as that because any such challenge would have to prove that there was an arbitrary deprivation of property.  Leon Campher, CEO of the Association for Savings and Investment SA, opined that prescription would have a negative effect on the country’s credit rating.

• Read Lisa Steyn’s original report on this story in full at BusinessLive (paywall access only)
• Read too, Prescribed assets ‘won’t work’, warns industry, at Moneyweb

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