One of the reasons pension assets are important for economic growth is that they are long-term in nature, and so can be deployed with a lower assessed risk outcome, write Sifiso Skenjana
One of the reasons pension assets are important for economic growth is that they are long-term in nature, and so can be deployed with a lower assessed risk outcomeANC economic policy head Enoch Godongwana. Picture: SUNDAY TIMES
A policy of prescribed asset investments would see a regulatory obligation on asset managers to invest a portion of the retirement funds they manage into the said development projects. The focus, therefore, on coal is a red herring in context of the asset prescription debate. Regulation 28 of the Pension Funds Act is a regulatory framework that provides guidelines and limits on the asset classes retirement assets can be invested in.
These two points should be the basis from which the conversation on prescribed assets should start. From the regulatory point of view, Godongwana lamented that despite the market participants not being legislators, their importance as stakeholders in the economic outcomes of the country could not be overemphasised.
There was an amendment to regulation 28 in 2018 that increased the allocation limits of offshore and African investments by pension funds to 25% to 30% and 5% to 10%, respectively.
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