ANC eyes pension funds for development finance

The ANC wants the Pension Funds Act changed to enable “cheaper access” to finance for development.

After a national executive committee (NEC) meeting at the weekend, secretary-general Ace Magashule said this week the party wanted regulation 28 of the act, which governs the way pension funds invest in various classes of assets, amended.

The regulation limits the extent to which retirement funds may invest in particular assets or, in particular, asset classes to protect the members’ retirement provision from the effects of poorly diversified investment portfolios.

Finance minister Tito Mboweni has supported the idea of pension funds being allowed to invest in infrastructure directly.

One idea being floated is the creation of project infrastructure bonds. As the cost of government debt has risen and the debt burden spiralled over the past five years, some in the ANC and Cosatu have suggested introducing the idea of prescribed assets.

If regulation 28 was amended to impose prescribed assets, this would set a minimum floor for the proportion of investments to be held in government stocks.

Government stocks are listed on the JSE and the pension fund industry is significantly invested in them.

Of the R1.1-trillion under management (excluding the

Government Employees Pension Fund), pension funds hold R202bn in government stock and a further R28bn in state-owned enterprises and municipalities.

Magashule said sustainable financing of economic recovery would require close co-ordination of fiscal and monetary policy to ensure ongoing access to capital markets, reduce the cost of borrowing, and strengthening the role of development finance institutions.