By John Fraser
A rapid rise in SA government spending will trigger a chain of events, culminating in the erosion of the value of your pension, leading economist Mike Schussler has warned.
He was (Tuesday) addressing a media briefing at the SA Institute of Race Relations (SAIRR), a leading independent think-tank, on an ANC plan to force financial institutions to channel a greater share of their assets into certain government instruments.
“The problem is that the government cannot stop spending,” he argued.
“(Rating agency) Moody’s must be pretty pissed-off. They have been lied to so many times. Moody’s will downgrade us in March or November next year. All the other rating agencies will follow (with further downgrades in their own rating profiles)”.
This was the second time the SAIRR had hosted a media briefing by Schussler on the same topic, and he fretted that within months the likelihood of pension pillage has grown.
“The expenditure rate of government has been increasing, partly due to the bail-outs of SOEs,” he noted.
“Annual government interest payments are at 4.8% of GDP, from 2.2% in 2009/10.”
He suggested that the seemingly inevitable downgrade of South Africa to junk status by Moody’s will lead to a leap in interest rates, which will, in turn, push the government into a swoop on pensions and other savings.
“I guess this will be within a year from the rating downgrade. If we get a final downgrade in March, it will take a year,” he predicted.
“They are going to be looking for funds,” he warned, noting that “SA has one of the largest pension pots in the world.
“Will we run to the IMF? No, we will run to our pension funds.
“SA has the 10th largest pension pot in the world in dollar terms. This is huge.
“The value is around 90%-100% of GDP. If you add insurance and medical scheme assets, you get to 160%-170% of GDP.”
Schussler, who is CEO of economists.co.za, noted that SA’s debt-to-GDP “trajectory has changed tremendously.”
This has increased the likelihood of further pension pillage, through the mechanism of prescribed assets.
“You (the State) need to get hold of assets that (will then) have to invest in government debt, to help lower interest payments,” he predicted.
“You are being screwed by highly-paid civil servants,” he noted, referring to the inflated public sector pay rates.
“This means there is less money for dams, schools. The next problem is medicine and textbooks at school.
“They are not going to do enough about the public wage bill. It is very likely that prescribed assets are the easiest way out. It is already ANC policy, and (provided for in) the law.”
He suggested that returns on pension funds and other savings will fall if a greater share of the pot is defined as prescribed assets.
This will have a downward knock-on effect on the value of pensions while also making medical aid more expensive and less affordable.
“The JSE will take a hit,” Schussler warned. “This will destroy the big financial firms.
“Asset managers are scared. This is why they aren’t talking publicly about this.
“I want the assets in my pension fund to grow, but there will be a social problem if this doesn’t happen.
“Things will get worse if we don’t get the returns we need.
“Our danger is in not addressing the fundamental overspending and growth issues that SA faces,” he concluded.
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ZA Confidential 
The criminals who bankrupted SA will milk pensioners to confirm self-destruction.
John, we must be on our guard against any attempt by the ANC to plunder our Retirement Funds! We need to make as much noise as possible to ensure that the Millions directly (Members) & indirectly (Spouses/ Families) rise up against this additional theft of ‘their’ money!
We should get everyone to send a letter to their Boards of Trustees demanding that they as our ‘custodians, guardians & representatives do not allow our Retirement Funds to be invested in any format or way without our formal approval such as any ANC SOE etc! As the outgoing Chairman of the 4th largest Umbrella Funds, I will from March 2020 join Mike & Co in this mission!
As the CEO of SAIFAA, I will also encourage our Members to get all their thousands of Client’s to stand up & be counted!
Derek Smorenburg (derek44@mweb.co.za)
My Friends let me remind you David killed Goliath even though the Bible said ‘thou shalt not kill.’
So does GOD break the rules sometimes yes he does.,when it comes to your well being.
So go and purchase bitcoin because it cannot be taxed. How long have you been controlled by government corruption and how long have you been overtaxed.?
Do you think GOD is happy the what the current government does to this country, I don’t think so.
I’m no financial guru but the touching of any pension fund( public or private) is highly unlikely. It’s no secret that the ANC will lose some support with the PIC debacle. They won’t risk ot further by touching people’s pensions. This is a scaring tactic which work too well in a gullible,naive and ill/misinformed SA society. Those who are preaching thos gospel would have been long out of the country( with their pensions) should that had been the case. We will not be downgraded anymore. Doomsayers are wishing for that to maintain existing status quo between poor & rich
Should we as Government employees be worried about our pension fund I have 15years left before I can retire Do I have to worry? What do I do?
1. Find a job in the private sector
2. Resign from public employment and take your pension with you
3. Do not reinvest in another pension fund at your new employer unless it is mandatory
The other option is to wait it out and see what happens, but basically the writing is against the wall….
Soon we will see the true colour of our economy, compliments of the anc.
NONONONONO!!!!
Without a doubt, the Government will come “raiding the Pension Funds”, there will be no other source of money.
I also believe that the ANC ripped us all off on the UBUNTU principle.Thats what makes the looting legal.
We gave these freedom fighters the whole country on a platter with profitable SOEs and a well built infrastructure. All that got looted and neglected. Laws were introduced to make us exist like sheep. Now we must loose the pension funds, then our property rights. Then the banks and Treasury are going to be nationalised. As was said: Turn the heat up slowly and boil us like frogs. What’s not realised is that the poorest people in this country are suffering the most while the elite rulers are living in palaces and a life of excess.
We all work for much less what they get today to get our pension to live from but now they want to steal our pension money, we can hardly live with the little pension we get. I say NO. Leave our pensions.
If the Anc touch the pention funds this country will burn.
Trustees of the Pension fund must be held accountable should “anything happen” to the Pension fund. Unless, offcourse, the law surrounding its administration is not worth the paper its written on with loopholes that will allow government to plunder ut under the banner of “prescribed assets”
First they loot the land, now they want to loot our pension money! No way!
1998 it was published that the pensions will be the last money haven for the ANC, I was not going to risk my retirement age with no money, living in fear and no medical, so I left! The thread goes through all of this, no one takes action, just ‘talk about it’! I took action, stop moaning South Africans, be smart! If you are aware of it, take action, STOP TALKING!
Every Member of a Pension Fund is a Shareholder of their own compelled savings of Pension Monies in a specified Pension Fund. These funds were brought about many years ago as too many pensioners became dependant on the Government for a monthly pension. So before your Trustees can allow any untoward investment of your Funds, they have to obtain written permission of the Members prior to such investments. If it is on the table with your “Savings” make sure that the Trustees know what the majority have opted to do.