By John Fraser
Want to die destitute? To be buried in a paupers’ grave? Well, the ANC can help.
Plans to direct even more SA pension fund resources into prescribed assets have been revealed as a major menace.
The warning came from esteemed economist Mike Schussler at a briefing at the SA Institute of Race Relations, which decided to offer an example to its media guests of the plight of paupers by offering no hospitality at the lunchtime briefing.
Schussler explained that, unlike, say, Argentina, South Africa might be able to avoid calling in the IMF if its finances are further damaged by runaway government spending.
Instead, the state could raise more funds by insisting that a larger share of pension funds needs to be invested in government bonds of one sort or another – including those of financially-cancerous Eskom.
He outlined the scale of pension fund resources in SA, where about one in three of we South Africans have some form of pension investment.
“The value is enormous – R4.3 trillion in 2017,” he said.
“We have 8th biggest pension assets in the world. We are a young country, and it is incredible to have such assets.
“They are the 5th highest in the world, in terms of pension fund assets to GDP.”
Schussler explained that there is already legislation which caps overseas investment of some pension funds, and he suggested it would not be difficult to further cut that percentage.
This strategy has been looked upon favourably by the ANC.
“Public debt is close to pension assets, as a percentage of GDP,” said Schussler.
“Once public debt overtakes pension assets we will be in trouble.
“Government may legislate to keep more of the pension pool here in SA.
“It may drive more investment into government bonds. You may force people to invest into things they do not want to invest in.
“If we were Argentina, we would have to run to the IMF. But we have large pension funds and an existing law. If you have corrupt activites, the more the motivation not to run to the IMF.”
Schussler, who at one time worked for state transport utility Transnet, noted that his fears are not just theoretical.
“You have Transnet pensioners in dire straits, because of the way their pension funds were placed (in poor Transnet-linked investments),” he warned.
“About 60 000 of these Transnet pensioners are left. A lot of people died in abject poverty.
“It is crucial there is professional oversight of pension funds.
“Not getting returns can make you poorer than you think. Ask the people at Transnet now. How many of them are in paupers’ graves?”
The IRR is campaigning to have people contact their pension funds, to voice their concerns and to motivate more opposition to the state threat.
Talks are also planned with the financial services representative body ASISA.
Like this article? Subscribe for free to ZA Confidential to receive our newsletters: Click here