The onslaught of commercially and politically expedient news stories, detailing the potential consequences of prescribed assets, is causing some local investors to make fear-based decisions instead of sticking to rational, fact-based portfolio strategies.
Prescribed assets are investments that an investor is legally forced to make due to government regulation within a retirement investment product. They are not a new concept to South Africans. In the 1970s and 1980s, the Nationalist government legislated prescribed assets within pension funds, before abolishing them in 1989.
In recent months, prescribed assets have been the subject of much debate, after the ANC tabled an investigation into the introduction of prescribed assets as part of its 2019 election manifesto.
The ANC’s manifesto stated that it will “investigate the introduction of prescribed assets on financial institutions’ funds to mobilise funds within a regulatory framework”.