Pension fund plan 'is expropriation'

Economic Development Minister Ebrahim Patel's plan to "force pension funds into certain government sanctioned investments" is a clear reference to expropriating pension fund money, a DA MP said yesterday.

Economic Development Minister Ebrahim Patel's plan to "force pension funds into certain government sanctioned investments" is a clear reference to expropriating pension fund money, a DA MP said yesterday.

"The situation is very similar to the threats of nationalisation of farmland," Dion George said in a statement.

"The policy proposal is a clear and unambiguous reference to expropriating pension fund money."

The medium-term strategic plan for the Department of Economic Development said it was agreed "during the 2003 growth summit to target investment of 5percent of investible funds into development areas and activities".

In his recent budget speech, Patel said: "What have been lacking to date are appropriate instruments to give effect to this commitment. Various options that combine prudent investment policy with development goals are open to us, including the issue of a development bond."

George said the plan ignored the fact that pension funds exist to provide their members with the most optimum returns on their contributions to finance their old age.

"In the event that government does guarantee the capital invested and a particular rate of return, it simply means that government debt is increasing along with the liability of current and future generations of taxpayers to meet these obligations," he said.

"If government underwrites the loans, members will be paying tax to fund returns on money that they lent to government."

George said the government already guarantees the benefits of the Government Employees Pension Fund, adding that therefore any sub-optimal return on prescribed investments automatically translated into an additional expense for taxpayers. - Sapa

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