South Africa

ANC confirms it wants your pension money for Eskom and Transnet

South Africa’s ruling ANC will forge ahead with plans to revive an apartheid-era rule compelling pension funds to plough money into certain government-approved investments, assuming it retains power in upcoming elections.

“Immediately after elections, we have to get into it,” Zuko Godlimpi, deputy chair of the ANC’s economic transformation committee, told Bloomberg in Johannesburg on Wednesday.

Unveiling its manifesto last month, the ANC pledged to transform the financial sector to ensure it makes adequate funds available for the nation’s industrialization and economic development by introducing prescribed assets.

The rule was created in 1956 during White-minority rule to force investment in government bonds but was scrapped decades later.

Plans to revive it have been criticized by the pension industry, which fears funds may be threatened if invested in under-performing state-owned enterprises. 

The ANC is examining the measure amid pressure to restore its appeal with voters ahead of the May 29 ballot, in which it is at risk of losing its national majority for the first time since taking power in 1994.

Goldimpi dismissed opinion polls suggesting the party’s support will fall below 50% and said there were no discussions about forming a coalition.

Still, the need to revive growth and tackle one of the highest unemployment rates in the world means steps are needed to use the wealth of the country’s financial sector to boost the economy.

He said the range of prescribed assets would go beyond investing in government bonds to support struggling state-owned firms such as Eskom and Transnet, which are in desperate need of funding after years of mismanagement, theft and under-investment.

“The prescribed assets conversation is about rebasing pension fund investment in productive assets,” Godlimpi said, adding that there was an assumption that it was all about Eskom and Transnet.

“It is not just that,” he said, stressing that the financial sector would be consulted.

“It is about investing in different classes of assets, including private assets themselves, but that is consistent with the industrial output that we are seeking,” he said.

Such a move would also tackle the over-concentration of the country’s retirement savings in the companies listed on the Johannesburg Stock Exchange, Godlimpi said, arguing that the distribution should be more spread out to other asset classes.

Most investment is “in telecoms, retail and therefore not the most productive sectors of the economy,” Goldimpi said.

Like many countries, South Africa’s pension industry is already closely regulated in terms of what it can purchase, including a rule capping investment in international assets at 45%.


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