Unions give thumbs up to controversial pension fund plan

Published Mar 2, 2021

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DURBAN - TRADE unions have welcomed government’s controversial proposal to invest large sums of pension funds money in public infrastructure on condition that it deals decisively with corruption to ensure that workers' money is not stolen.

At least one union said addressing corruption and imposing stiff punishment on the corrupt will be one of the key assurances it requires to give the proposal the nod. The union also said before workers' money could be invested in public assets, stronger oversight, the elimination of political influence, centralised procurement processes, transparency and the jailing of all those that have been implicated in corruption should be prerequisites.

Another union warned that workers’ money should not be dumped in a black hole.

The unions were reacting to the news that the National Treasury proposed amendments to the Pension Fund Act to allow the investment of members’ money in public infrastructure.

Cosatu national spokesperson Sizwe Pamla said the proposal was a step in the right direction, but would only be acceptable and work efficiently, if there was confidence that the government would clamp down on corruption. The National Treasury said it was proposing changing rules governing pension funds to encourage investment in infrastructure projects.

“The Treasury is proposing changes to Regulation 28 of the Pension Funds Act in draft amendments published for public comment on Friday. This rule sets the maximum percentage of a fund's assets that can be invested in different asset classes and is aimed to shield savers from over-concentrated investments.

“The proposed amendments do not introduce infrastructure as a new asset class alongside existing ones like equities, debt instruments and property but allow for infrastructure investments to be recognised within those asset classes,” said the Treasury.

It stated that the overall investment in infrastructure across all asset categories may not exceed 45% of domestic exposure and an additional 10% for the rest of Africa.

“The changes should make it easier for retirement funds to invest in infrastructure and allow for better measurement of investment in projects,” it said.

Pamla said pension funds investment in impact projects was key to unlocking the economy that has been stagnant for almost a decade and unable to attract foreign investments.

He said prior to the Covid-19 crisis, the country had pension funds savings estimated at about R9 trillion. “This is a positive idea, it's not really new. Pension funds are already expected to invest about 10% in impact projects but currently they are investing aboute 2% so there is still space there.

“When you have an economy that has been stagnant for a decade and has not grown in a decade, investors re-evaluate the investment strategy and they invest elsewhere where they will get returns. It is better to mobilise internal resources that are not exposed to volatility.”

Pamla, however, said no pension money should be sunk into any investments until the government showed commitment in addressing corruption.

“We want the unions to have representation in such a process for it to be transparent and for all procurements to be centralised, so they could be followed and for people accused of corruption to be jailed. We also want the government to ban family members of political individuals and politically exposed people from doing business with the state as that would start to attract people in public service who are interested in delivering service and not exploiting business opportunities.”

He said such a ban would not be an infringement on anyone’s rights, as “politicians are elected people, it's just a matter of votes that makes them be in their position, they can step down from those positions if their family business is affected”.r

Astri Al Anani, the chief negotiator for the Public Servants Association of SA, said they would still need to hold workshops on the changes that would be implemented before they could formulate a position on the matter.

However, she said they were not opposed to any investments that would help to grow the funds of members. “What we do not want is a situation where workers’ money is taken and dumped into a black hole.”

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