State access to pension funds takes step closer
ANC policy proposals now in government discussion document
● The government is formally considering launching a state bank and amending pension fund regulations to allow state finance institutions to access retirement fund savings at favourable rates.
These proposals — mooted by the ANC in its own recovery plan last month — have now been included in an economic reconstruction and recovery plan drawn up by the cabinet’s economic cluster.
The document, which the Sunday Times has seen, describes ambitious plans to invest in infrastructure projects, such as converting thousands of government buildings to green energy, and training communities to do this work.
There is a commitment to add 1,338MW of extra power purchased from independent power producers (IPPs) to the national grid by June next year.
The ANC called for the creation of a stateowned bank and amendments to pension fund regulations in its document, “Reconstruction, Growth and Transformation: Building a New Inclusive Economy”, released last month.
At the time critics said the state did not have the financial muscle to start a fully fledged bank, while the pension fund industry raised concerns about erosion of value if retirement funds were forced to invest in projects managed by the government and state-owned entities.
However, now that these proposals have been incorporated in a government discussion document, it could just be a matter of time before they become official policy.
“Processes, already under way, to establish a properly capitalised and governed state bank will be accelerated,” the document says.
“The state bank will be able to access different forms of capital, in addition to taking deposits. [It] has a critical role to play in deepening financial inclusion and to further enhance competition in the banking sector.”
The document gives no details about the work it says has already been done with regards to creating a state bank, or say how much has been budgeted for it.
The economics cluster also supported the ANC’s view that development finance institutions that undertake work on new infrastructure projects — key to reviving the economy and creating jobs — be allowed to tap into pension funds for extra resources.
“Regulation 28 of the Pension Funds Act will be amended in order to unlock the funding of long-term infrastructure projects and high-impact capital projects, and the amendment … will facilitate direct access to pension funds’ pool of resources by state development finance institutions,” the document says.
“Ultimately the end goal is to support ecoment, nomic recovery and build a new fast-growing, inclusive economy buttressed by a massive infrastructure roll-out programme that supports reindustrialisation through localisation, changes the structure of the economy, builds climate resilience, creates jobs, and enhances productivity while building a critical base for the export market with a specific focus on the African continent.”
To secure energy supply, the economics cluster says it is confident that just over 2,000MW can be added to the national grid by June 2021.
This includes another 550MW from Eskom, 128MW held by IPPs, and 1,338MW more to be generated as part of bid window 4 of the IPP programme.
Excerpts from the economic recovery document were presented at a meeting of the National Economic Development and Labour Council (Nedlac) on Thursday by tourism minister Mmamoloko KubayiNgubane, who chairs the economics cluster. The department’s director-general, Victor Tharage, declined to comment on the docusaying it was not official policy and had not been submitted to the cabinet.
Martin Kingston, who represents Business Unity SA at Nedlac, said the social partners were in agreement that structural reforms — which have been under discussion for about a year — were overdue.
“Government needs to demonstrate the political will to give effect to those reforms on an expedited basis,” he said.
“Patience is wearing thin on the part of many stakeholders. The providers of capital have multiple demands from other countries,
The Pension Funds Act will be amended to unlock the funding of infrastructure projects
and we can’t afford to be last in the queue.”
In their presentation to Nedlac, Cosatu and other labour federations also called for urgency in reviving the economy and an end to the “festival of documents”.
“Our economy is on its knees and millions of jobs are at risk,” the labour submission said.
“We simply cannot afford to delay our response to the economic crisis a day longer,” it said, calling unemployment “a ticking time bomb that threatens our very survival”.