(4 minutes read)
· ANC’s economic policy chief Enoch Godongwana said that the party’s proposal to revisit regulation 28 of the Pension Funds Act should be viewed as an alternative to prescribed assets
· The ANC has had talks with the country’s top 20 pension funds, including the Public Investment Corporation.
· The ANC proposes to amend Regulation 28 of the Pension Funds Act to allow development finance institutions to fund long-term infrastructure and capital projects. Currently, the Act refers only to investment in immovable property.
ANC’s economic policy chief Enoch Godongwana said that the party’s proposal to revisit regulation 28 of the Pension Funds Act should be viewed as an alternative to prescribed assets. He denied it as a backdoor measure to bring in rules that will force pension funds to invest in government stock. The ANC’s policy paper published in July suggested that an amendment of the regulation could lead to greater investment in infrastructure by the collective savings industry.
The ANC is in discussions with the pension funds industry and the treasury regarding the use of pension funds or retirement savings to finance government’s infrastructure projects. The ANC has had talks with the country’s top 20 pension funds, including the Public Investment Corporation. The ANC proposes to amend Regulation 28 of the Pension Funds Act to allow development finance institutions to fund long-term infrastructure and capital projects. Currently, the Act refers only to investment in immovable property.
ANC is not proposing that the state implements a policy of prescribed assets but that the party is proposing a relook into Regulation 28. If properly packaged there is no reason why pension funds should not invest in infrastructure directly instead of using third parties in the form of asset managers.
The ANC also wants the development finance institutions to invest in green bonds because they are more affordable than traditional bonds since they offer opportunities to promote long-term economic competitiveness and climate resilience.
The ANC proposals are a framework for the key interventions that the government should implement to assist in stimulating growth and investment and to create jobs during the time of the Covid-19 pandemic and beyond. The proposal is that the government invest in energy, water and sanitation; roads and bridges; human settlements; healthcare; education; digital infrastructure and public transport.
The proposed agency will sit within the office of the presidency. Other proposals include having the South African Reserve Bank directly funding the same development finance institutions through a R500-billion fund and the creation of more state-owned enterprises in the form of a state bank and a state pharmaceutical company.
