Tito Mboweni, South African Minister of Finance walks with members of the Finance Ministry up Government Avenue to deliver his medium-term budget speech on October 24, 2018. (RODGER BOSCH/AFP/Getty Images) ~ AFP
National Treasury is not "actively" considering introducing prescribed assets, Finance Minister Tito Mboweni has said, while warning against comments that could potentially "scare" members into cashing out their funds early.
The minister was responding to a question from DA MP Geordin Hill-Lewis on Treasury's position on the prescription of assets. Hill-Lewis has in the past referred to prescribed assets as "pension theft".
Prescribed assets describe a policy where the state obliges institutions such as pension funds and insurance companies to invest a part of their funds in state institutions or bonds. The apartheid government maintained the policy for 33 years between 1956 and 1989.
While not official government policy, in its election manifesto for 2019 the ANC said it would investigate the prescription of assets.
The topic made headlines in August this year, when President Cyril Ramaphosa told Parliament there should be discussions in the pension fund industry around prescribed assets in light of the important role the funds play in development. The president was at the time responding to a question from former DA leader Mmusi Maimane. He did not at the time specifically say whether or not he supported the prescription of assets, confining his remarks to saying government would pursues policies in the interests of the public.
In his written response to Hill-Lewis, Mboweni said it is government's responsibility is to protect funds. "I want to assure all members of any retirement fund that government’s first and foremost responsibility is to protect their funds at all times, and we have in fact strengthened our regulatory system to continue to do so."
"In addition, the current regulatory framework in terms of the Pensions Fund Act places a fiduciary duty on trustees of funds to always invest prudently and in the best interest of the members," he said.
The finance minister said this means long-term investments should supports economic development and growth while ensuring good returns based on fund and market fundamentals. "This is good for pension fund members as well as the country."
The minister also warned people making public comments about retirement funds not to "scare" fund members into cashing out their funds, which would negatively impacting their savings.
"They will become more vulnerable in old age, when they retire and no longer have a decent income or savings," Mboweni warned.
He also confirmed that Treasury has not this year arranged consultative meetings on prescribed assets