Prescribing assets: IRR is 'stirring up panic' about ANC accessing pensions

Saita's Leon Campher says the Institute of Race Relations has got it wrong and govt is unlikely to force retirement funds' hand.

Government is unlikely to force retirement funds to invest in specific projects through prescribed assets, says the Association for Savings and Investment SA (Asisa).

The body was responding to "the most recent attempt" by the Institute of Race Relations (IRR) to draw the association into the ongoing prescription debate.

Fears have been raised that government plans to force investors to put their money into specific projects, so that it could for example use pension funds to bail out embattled state-owned enterprises (SOEs) like Eskom

The ANC's Enoch Godongwana (head of Economic Transformation Committee) has said that the party is moving away from talk of prescribed assets, but still wants to find ways to unlock the country's pensions to assist with infrastructure goals.

How should this statement be interpreted?

The IRR seems to think it leaves a backdoor open for the ANC to get its hands on our pensions and has been lobbying against the idea.

Eskom's Medupi power station. Picture: Eskom.co.za

At the same time, Asisa accuses the institute of trying to stir up investor panic when rationality is needed more than ever.

"Proposals to amend Regulation 28 of the Pension Fund Act to include a separate category for retirement funds to invest in infrastructure assets do not equate to prescription", writes Asisa CEO Leon Campher in a Moneyweb article.

Whitfield interviews Hermann Pretorius (IRR Deputy Head of Policy Research) about his concerns.

Pretorius outlines what he says is the fundamental problem with prescribing assets.

When property rights become so tenuous and so under attack that everything from immovable property to assets, the savings and pensions of ordinary people who played by the rules their entire lives... that then becoming essentially available to the government to use to bail out itself for its own failure.
Hermann Pretorius, Deputy Head of Policy Research - Institute of Race Relations

Economically also, if you have to to prescribe investment in something, that means there was an initial reason for that investment not being attractive and that would then be an uncomfortable investment to make at best.
Hermann Pretorius, Deputy Head of Policy Research - Institute of Race Relations

Pretorius does not believe this "danger" has passed.

I think we've all been around the block enough times to know that when a politician says something it isn't necessarily holy writ.
Hermann Pretorius, Deputy Head of Policy Research - Institute of Race Relations

We need to make sure that where such a policy is being considered it must be opposed not when it is already implemented and already having negative effects, but in the buildup to that in the debate while we can still make sure that the dangers are clear.
Hermann Pretorius, Deputy Head of Policy Research - Institute of Race Relations

Is the Association for Savings and Investment SA saying that the IRR is blowing the situation out of proportion?

Asisa CEO Leon Campher discusses the ANC's latest economic recovery plan and the body's upfront involvement in discussions.

We've been very fortunate to be part of Business for South Africa and engaged by Nedlac with all the social partners in all the presentations that were done to the president (that's labour, community, government and business). It was most encouraging that there was in excess of 90% alignment in all these plans.
Leon Campher, CEO - Association for Savings and Investment SA (Asisa)

If there were to be prescription, he says, it wouldn't solve challenges like moving to clean energy and attracting foreign capital.

Prescription just means you get further indebted and it will chase away capital and I think nobody has put that on the table.
Leon Campher, CEO - Association for Savings and Investment SA (Asisa)

It must not be confused with some debate around regulation 28 in terms of the Pension Fund Act which was put there to actually facilitate diversification.
Leon Campher, CEO - Association for Savings and Investment SA (Asisa)

Campher says while it is the IRR's democratic right to communicate with Asisa members, the institute is getting its message wrong.

Listen to the arguments in the audio below: