Govt won’t force pensions to be invested in infrastructure projects, says deputy fin minister

JOHANNESBURG – The South African government has no intention of forcing pension funds to invest in specified projects or assets which will not yield optimal returns, says Deputy Finance Minister David Masondo.

Masondo was responding to questions in the National Assembly on Wednesday. Finance Minister Tito Mboweni could not attend the sitting.

During the session, Democratic Alliance MP Dion George asked if pension funds would be forced to invest in government’s infrastructure programme.

“There is no intention from government to oblige retirement funds on how to invest, be it in government infrastructure or any other projects or investments,” Masondo said.

“All investment decisions are ultimately the duty of the board of trustees who decide which assets retirement funds should be invested in as per the fund’s investment mandate,” he added. Masondo’s remarks come amid debate within the ruling ANC about how to boost local investment.

The party’s proposed economic recovery strategy includes a proposal to have regulation 28 of the Pension Funds Act “tweaked” to allow trustees of funds to invest in more asset classes, namely infrastructure.

On Wednesday, Masondo explained that amending regulation 28 would allow retirement funds to “broaden the scope” of the type of investments they can make, including public infrastructure projects.

“(It is) just to enable trustees to have a wider choice … the intention is not to force them to invest in particular investments that government prefers.”

He also said that trustees would have a choice to do so if they wish to, as they have a fiduciary duty towards fund members to deliver better returns. “Savers are not saving money in order to lose money,” Masondo said.