Pension funds in ANC crosshairs
deals, and that would drive down investment returns, Canter argued.
Opposition to prescription was not about the investor market being hostile to development, he said, but was instead about “the industry protecting the integrity of people’s savings”, noting there were millions of retirement fund members across the social spectrum.
South Africa’s financial sector provides enormous capital to national development, a fact which is often overlooked.
The idea of prescription was to tell people where to invest their money, and that raised the question of whether introducing prescription would be legal, Canter added. “If government instructs investors, and returns suffer, will the fiscus underwrite the losses?” he asked.
Answering the charge that markets are failing, Canter highlighted that well-considered developmental programmes have never failed to attract capital investment: “Just look at the over R200-billion mobilised for the start-up alternative energy sector in the past few years,” he said.
The Government Employees Pension Fund (GEPF) is a definedbenefit fund, meaning that, at retirement, employees’ benefits are paid out at a set rate rather than at a rate governed by the investment performance of a fund. The fund is underwritten by the state, which is liable for any gaps between the benefits due to beneficiaries and the money available in the fund.
The PIC is an extension of the fiscus, argued Canter, and taxpayers are “on the hook” for any shortfalls in the fund that may be brought on by poor performance.
Given these risks, it was crucial that the PIC remained an independent entity, operating on fiduciary principles, he said.
In May, treasury said in Parliament that the PIC was being considered as a possible option to recapitalise an ailing SAA. This prompted the GEPF to release a statement reassuring members that their savings were safe and that no discussions had been held with the fund on the matter.
The fund refused to comment on Gigaba’s statement, saying it “cannot comment on political parties’ sideline statements”.
But the fund’s mandate to the PIC “is very clear, therefore there is no immediate need to change the mandate”, it said. In addition, the fund was already supporting economic transformation through its developmental investment policy, it said.
The aim of the policy is to earn good returns for fund members while supporting positive, longterm economic, social and environmental outcomes for South Africa. It allows for investments, including in economic and social infrastructure, and broad-based black economic empowerment.
The PIC did not answer questions put to it by the Mail & Guardian this week. In previous statements it has stressed that, although it does hold a substantial number of state-owned enterprises’ bonds, a significant portion of these are government guaranteed.
It also said it was concerned with the governance practices of certain parastatals and had discussed this matter with the treasury. Additionally, it has said it was in discussions with “external company law experts to determine what changes can be made to the PIC’s governance policies to enable the PIC to exercise a greater degree of oversight on the governance structures of investee state-owned enterprises”.
It has stressed that it is “not conflicted as an organ of state, as all investment decisions are taken in the best interest of our clients and in line with client mandate requirements and the investment risk parameters stipulated by client mandates”.