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Business Times reports that asset managers have again warned that if the ANC carries through its manifesto pledge to force retirement and other funds to invest in state-owned enterprises and government-led infrastructure projects, it could increase risk for savers and result in lower returns.
The governing party last week defended its 2024 elections manifesto pledge to “engage and direct financial institutions to invest a portion of their funds in industrialisation, infrastructure development and the economy, through prescribed assets”. The move would require an amendment to Regulation 28 of the Pension Fund Act. Zuko Godlimpi, deputy chair of the ANC’s economic policy formulation subcommittee, described the reaction to their asset prescription proposal as alarmist. “The reaction so far has been ‘oh no, they are raiding our pensions, they want us to buy government bonds’. The manifesto is not predicated on a lunatic misunderstanding of how markets function and how the economy functions,” he commented. Godlimpi said the ANC was trying to remedy an anomaly wherein the bulk of private retirement fund assets invested on the JSE were in the top 100 listed firms. This meant companies outside the top 100 did not have as much access to the country’s investments and savings. The Association for Savings and Investment South Africa (Asia) advised against the reintroduction of prescribed assets, saying it could result in unintended negative outcomes for retirement fund members and investors. The country abandoned the policy in 1989. It had been in place for more than three decades while external capital access was restricted.
- Read the full original of the report in the above regard by Tannur Anders & Khulekani Magubane at Business Times (subscriber access only)
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