The Democratic Alliance (DA) welcomes the undertaking given by Deputy Minister of Finance, David Masondo, during question time in Parliament today, that the government will not force pension fund trustees to invest in government prescribed assets.
In response to a question on whether funds will be obliged to invest in the government’s multi-trillion rand infrastructure project, the Deputy Minister responded that government would not interfere with the existing discretion of trustees to invest pension fund assets according to their investment strategies.
He added that trustees would not be obliged to invest in any other prescribed assets either and that the trustees of the Government Employees Pension Fund in particular would not be instructed to invest in the infrastructure project.
The Deputy Minister’s response appears to contradict previous statements by the ANC that pension fund assets would need to be mobilized towards government’s economic development objectives. This was widely interpreted as the intended re-introduction of apartheid-era prescribed assets that forced pension funds to invest in sub-optimal government issued bonds.
Despite the Deputy Minister’s assurance we remain concerned that amendments to regulation 28 will permit pension funds to invest in failed state-owned enterprises and inefficient government infrastructure projects, which current regulations do not accommodate.
Pension funds are often the only assets held by hard working South Africans hoping to build a nest-egg to provide for their eventual retirement, given that the government is unable to offer any meaningful support in old age. Any prescribed asset that returns less than available investment alternatives has a significant negative long term effect.
The DA will oppose any attempt by the government to do anything other than allow trustees to make the most optimal investment decisions on behalf of pension fund members.
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