Yes to builders — Alexander Forbes
• But top pension fund manager is dead set against imposition of any form of prescribed assets
One of SA s largest
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pension fund administrators and managers is dead set against any form of prescribed assets, but will embrace plans to fund local infrastructure assets if projects meet governance standards and required risk-adjusted returns. Prescription should not
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happen and we are dead against it, and we think it will not happen,” said Alexander Forbes CEO Dawie de Villiers. /
One of SA’s largest pension fund administrators and managers is dead set against any form of prescribed assets, but will embrace plans to fund local infrastructure assets if projects meet governance standards and required risk-adjusted returns.
“Prescription should not happen and we are dead against it, and we think it will not happen. The right way to do it, and which we would be very keen to support, is by making the projects accessible for pension funds to invest by ensuring appropriate governance is in place and suitable risk-adjusted returns are achievable,” said Alexander Forbes CEO Dawie de Villiers.
He said that the addition of infrastructure as its own asset class would be of immense value to retirement funds such as those administered and managed by Alexander Forbes, because these could provide an alternative source of stable and diversified returns stretching over many decades.
De Villiers’s comments come as President Cyril Ramaphosa considers ways to lift economic growth within the confines of a highly constrained government balance sheet that has been progressively downgraded by international ratings agencies since the country lost its investment grade credit rating in March 2020. One of the most contentious proposals in recent months has been the idea of prescribed assets with which to invest in infrastructure and support bankrupt state-owned enterprises.
De Villiers said that not much if anything had to be done to Regulation 28 (the laws governing how retirement funds are allowed to invest) to facilitate the hundreds of billions of rand the private sector could invest in infrastructure.
“I think there is ample room in the current regulations for retirement funds to allocate capital to these projects,” he said.
While they were solid, the group’s results for the interim period to end September underscored the need for urgent measures to ignite investment and job creation. Operating income fell 3% to R1.5bn while profit for the period from continuing operations was flat at R251m. Lower profitability from discontinued operations meant headline earnings per share for the period fell 41% to 14.5c per share.
De Villiers said that the number of people leaving pension funds it administered or managed as a result of retrenchments rose to 15,000 in the period compared with the 5,000-6,000 exits in the previous matching six-month period.
“The majority of retrenchments have come from SMMEs [small and medium-sized enterprises], where it is probably easier for them to undertake retrenchments.
“I expect the big listed companies will retrench too. While the numbers appear to be flattening we expect this will continue for the rest of the year,” said De Villiers.