ANC in talks to allow pension funds to invest directly in infrastructure projects

The ANC says it is not attempting to grab private pensions through prescribed assets by proposing an amendment to the Pension Fund Act.
The ANC says it is not attempting to grab private pensions through prescribed assets by proposing an amendment to the Pension Fund Act.
Image: Picture: 123RF/FLYNT

The ANC is in discussions with the private pensions industry and the National Treasury on how best to change the law to allow pension funds to invest directly in infrastructure projects.

However, the party has reiterated that it is not attempting to grab private pensions through prescribed assets by proposing an amendment to Regulation 28 of the Pension Fund Act.

The proposal is carried in a discussion document of the ANC’s economic transformation committee titled “Reconstruction, Growth and Transformation: Building a new and inclusive economy”.

Speaking at a virtual press conference on Friday, economic transformation committee chair Enoch Godongwana said the issue of prescribed assets was not on the table.

“We are having discussions with the pension fund industry and the Treasury. We’ve not gone into final details as to what those changes should be, but surely we are not going into a prescription framework in that document,” he said.

In the document, the ANC said amending Regulation 28 of the Pension Fund Act would “increase access of the savings of South Africans to fund long-term infrastructure capital projects managed by development finance institutions (DFIs)”. 

It calls for “necessary regulatory mechanism to ensure increased pension fund investments directly into projects such as real assets, which can unlock capital that is currently not finding its way into (these) projects”.

Gondongwana said discussions with the pension fund industry were around how to make it possible for pension funds to invest directly in infrastructure rather than through intermediaries.

“We have an infrastructure programme that has to be developed. If properly packaged, there’s no reason why pension funds should not invest in that infrastructure directly instead of using third parties in the form of asset managers. It just increases the cost for development,” he said.

The ANC also wants the Public Investment Corporation and the Reserve Bank to directly “fund long-term infrastructure and capital projects” to help revive the economy after the Covid-19  crisis.

It also calls for more state interventions across all sectors, including speeding creation of a state-owned bank and a state-owned pharmaceutical company, and other interventions in mining, manufacturing, energy and other sectors.

Weighing in on the debate over whether the Reserve Bank should directly pump more money into the economy through bond purchases or quantitative easing, the ANC said it wanted the adoption of a “pro-growth and pro-investment” monetary policy instruments.

“The Covid-19 crisis has provided a clear indication of the role the monetary authorities can play in injecting resources into the economy and in using bond purchases to stabilise capital markets and put downward pressure on longer-term interest rates,” it said.

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