The South African government’s intention to implement prescribed assets is the latest of a number of reckless and nonsensical policies.

In essence, this would mean a mandatory investment of pensions and savings into government ‘assets’. This must not be allowed to happen. Every South African should oppose this plan and prevent the African National Congress (ANC) from stealing their nest egg.

The government is currently investigating the possibility of changing Regulation 28 of the Pension Fund Act. Regulation 28 limits the extent to which retirement funds may invest in particular assets or asset classes. The chief purpose of this is to ensure that the portfolios of savers are well diversified so as to limit their exposure to one asset or asset class in particular.

However, many commentators and economists suspect the government aims to use this well-intentioned regulation for their own devious ends. It is no secret that the government has run out of money, and quite frankly out of options. South Africa’s debt is currently at 60.6% of our GDP. Put another way, the country owes R70 315,14 for every citizen. South Africa pays over R200bn in interest alone per year. Our budget deficit or shortfall is set to increase to 6.8% of GDP in the fiscal year ending March 2021.

Minister of Finance Tito Mboweni has said that, after Covid-19, this figure might balloon to 15.7% of GDP. The state coffers are so depleted that we are now approaching international finance institutions for money. The ANC has become so desperate that it deviasted from its long-held conviction to avoid approaching international finance institutions such as the International Monetary Fund (IMF) for financial assistance.

Belief in socialism

The reason for avoiding such aid was said to be its determination to retain financial sovereignty, but the real reason is ideological. Receiving financing from an institution like the IMF or World Bank would mean agreeing to certain conditions. These conditions are the adoption and implementation of liberal labour, economic, and social policies. This is, of course, in sharp contrast to the ANC and South African Communist Party’s (SACP) ideological belief in socialism.

The fact that the ANC has now accepted funding from the IMF means that it has exhausted all other alternatives and was forced to swallow its pride and stick out the begging bowl.

It now has its sights firmly set on the savings and pensions of hard-working South Africans to bail out failing state-owned enterprises (SOE), increase public wages, create a state bank, and fund the planned National Health Insurance (NHI) among other things.

As far as track records go, the ANC/SACP government has one of the worst. Just recently, there have been allegations of hundreds of millions of rands intended for Covid-19 relief and procurement being diverted into the pockets of cadres and their families.

The government’s multiple failures speak for themselves, and for anyone to hand over their hard-earned savings to it would be like trusting a bankrupt person with their credit card.

‘An invitation for prescribed assets’

The government has denied that savings and pensions will be used to bail out struggling SOEs. So said the head of the ANC’s economic transformation committee, Enoch Godongwana, in a recent webinar. However – commenting on the decision by Nedbank and Standard Bank to stop funding new coal power projects – Godongwana said on Carte Blanche that, ‘to me, that’s an invitation for prescribed assets’.

Whatever the government says, once it changes Regulation 28 it will have access to an entirely new pool of money. And, given the allegations concerning Covid-19 relief funds and procurement tenders, there is good reason for stopping it from laying its hands on savings and pensions.

It is the government that has got us into our present financial predicament, and we should not expect a solution from it. As former United States president Ronald Reagan once remarked: ‘The nine most terrifying words in the English language are: “I’m from the Government, and I’m here to help”.’

We go to work every day, we pay some of the highest taxes in the world, and now our government wants us to give even more. This is unacceptable. We have arrived at this juncture due to more than a decade’s mismanagement, maladministration, and corruption.

Money meant for state funerals ends up in the pockets of cadres, money intended for the procurement of Personal Protective Equipment (PPE) ends up in the pockets of cadres, even food parcels meant for the most vulnerable members of our communities end up in the hands of cadres.

Empty rhetoric

No one is ever punished for this. All we ever get is empty rhetoric and investigations by the ANC’s own integrity committee. The irony of this committee is laughable. We have spent millions of rands on commissions of inquiry, but they seem to provide little more than an opportunity for confession and forgiveness. 

South Africans, individuals and institutions alike, must fight the prescribed assets policy.

Corporate South Africa, in particular, cannot remain silent on this issue. It is corporate institutions that will be charged with helping the government to implement this policy, and they need to declare whether or not they will stand with us, who trust them with our money, or sell us out.

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10 COMMENTS

  1. We had prescribed assets in the past. I was one who fought for years to have it abandoned. We finally succeeded in +_1986.
    There is one very important difference between then and now. Almost all pension funds used to be of the “final salary” type. This meant that the employer carried the in vestment risk. The major remaining fund of this nature is of course the GEPS. In this case the employer is of course the taxpayer. Today most pension funds are of the “fixed contribution” type. Here it is the pension fund member who carries the investment risk. The lower the return on the investments, the lower the eventual pension. This another direct tax on the taxpayers.
    We must stop this!

  2. I am told by my tax accountant that this bubbling under threat to your pension is pretty much a scare story much like a certain end of the world cold virus was going to annihilate half of mankind before Christmas.
    It would seem that as of today Aug 2020 there is no fanatical urge on the part of this government to coerce pensioners funds into any form of state bailout of the likes of Eskom or SAA. Apart from anything it would be rather bad optics especially as they, the government, is now trying to encourage direct investment after their disastrous 5 month cold virus cock up.

    • Oh yes, this is certainly true. In fact, my accountant told me that they only want to do this because they know that we will then earn at least 49% annual returns on these investments, thus ensuring an extremely comfortable and prosperous retirement for all of the country’s citizens. They are going to earn these returns especially in the transport and energy business, because they will invest in fodder for Father Christmas’ reindeer and light from stardust.

      OK, fairy tales apart. Why the heck do you think they want to make this change if not to enable plundering of the pension funds? Can you give us one single valid reason?

  3. You are allowed to send a million or two out of the country on a yearly basis where the criminals in gov can’t get to it. Lets pool it together and invest it where the returns linked to the never going up over the long term exchange rate makes it a very good investments.

  4. Based on the record of past actions, I believe corporate SA will not stand against the government unless its interests are threatened. Even then, companies will try to ingratiate themselves to the government in an attempt to gain protection. Just look at who was involved in the Thuma Mina jamboree during Ramaphosa’s early days and ask yourselves why they did it, or why Discovery would give free shares in its new bank only to black depositors and its CEO would say “this is a good thing”. As has been the case in every country which tried communism (which in SA’s case is combined with racist policies), this is a fruitless strategy because the government intends to take over everything in the private sector and shall do so over time, which in turn will ruin the whole country except for the ruling elite who have been feathering their nests for decades. Back in 2017, I looked at SA’s situation from a social, political and economic point of view, and came to the conclusion that ANC and the government it (mis)leads will have run out of manoeuvering room by 2024, which would set it on taking land, means of production and investments in private hands in order to meet sovereign debt obligations and welfare payments to its voters. While I did not anticipate the Covid-19 lockdown, I did think there was going to be an economic depression a little before then, created largely by dumb socioeconomic policies and capital flight from which the country is extremely unlikely to recover, and which the ANC will try to resolve through increased expropriation of private sector assets that in turn will kill the beating of the country’s economic heart. This is becoming more evident now, but in truth it has been in existence and unaddressed for the last twenty years, pretty much ever since Thabo Mbeki pivoted SA towards China and away from the West. The fate of the country was sealed then, and corporate SA did nothing beyond disinvestment and moving assets from the country as Anglo American did. They didn’t fight the government then, they are not fighting it now (just look at how BATSA and FITA dropped their cases against the government), and odds are they will not fight it in the future until it is too late. If the looting of pension and investment funds is to be stopped, I think it will be the ordinary people who are going to do it, though it has to be said they are unlikely to succeed given how the ANC-(mis)led government has been going ahead with the disastrous Mining Charter and the constitutional amendment to expropriate (read confiscate) land, which policies are fairly clear indicators of the course our country is set to follow in the next four years. Time is running out.

    • Spot on. As a retiree I feel like a rabbit in the headlights. And my investment company assures me I have nothing to worry about. This really gets my alarm bells ringing!

      • Investment companies are always optimistic when they’re playing with other people’s money instead of their own. Banks are no different. I think about Sygnia Capital and Magda Wierzycka- she was quite enthusiastic about the Thuma Mina thing and I wondered why she was trying to make SA look like an investor’s paradise when it is anything but. Let’s just say that knowing what I know about communism (I lived under communism in Romania until the 1989 revolution) and how people from such countries think, my answer to that question is not flattering… As for the banks, they offered to fund the government’s efforts to expropriate land with R100 billion. Are they going to do it with their money? Unlikely. It will be their depositors’ money. After all, who wants to sink a pile like that into the destruction of agriculture and possible collapse of banks due to mortgages which the victims of expropriation will not be able to pay back? Bankers are not stupid, but if they’ll do anything, it will be with other people’s money just like investment firms. Be afraid, be very afraid.

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