The SACP will put the issue of prescribed assets, which forces pension funds to invest in government stock, back on the table at the ANC’s policy conference scheduled for end-July.
With Cosatu, the SACP is part of an alliance with the ruling party, and its voice is largely considered in ANC policy decisions. But the SACP should expect fierce pushback on the issue from the ANC, which rejected the idea at earlier conferences.
After a backlash from civil society and pension fund administrators and managers, the ANC backed off from the idea, with the party’s previous economic head and current finance minister, Enoch Godogwana, saying it was off the table.
Amending Regulation 28 of the Pension Funds Act that sets the maximum level that pension funds and life insurers can hold in various asset classes such as government bonds or property, was rejected at the ANC’s national conference in 2017.
The regulation limits the extent to which funds can invest in asset classes or individual assets in an effort to protect retail investors from overexposing their capital to any one share or investment class. There were also market concerns about the implications it could have for investment portfolios and investment outcomes.
But the SACP, which is holding its four-day national conference this week, thinks putting the prescribed assets back on the ANC’s agenda is a panacea to reignite the stagnant economy.
“The Public Investment Corporation has R3-trillion … And when we say take some of the money that are held by workers’ retirement and pension funds and invest it in infrastructure and the manufacturing sector … we will campaign for that,” outgoing SACP general secretary Blade Nzimande said on Wednesday.
“We believe that is the correct way of taking money out of this bubble of the financial sector and putting it in job-creating activities.… We are saying now that we are not going to rely on boardroom discussions [with the ANC].”
Nzimande did not provide more information on what the SACP, which had previously threatened to pull out of the tripartite alliance, will do to ensure that the ANC changes its stance on prescribed assets.
According to the latest amendments to Regulation 28 that were published by the National Treasury in July, retirement funds will be allowed to allocate up to 45% of their assets to infrastructure investments, though this limit excludes debt instruments or loans either issued or guaranteed by the government.
Regulation 28 will also have a specific definition for what constitutes infrastructure. The amendments will come into effect in 2023 after two rounds of public comments in 2021.
Nzimande, who will not run for general secretary after 24 years in the position, said the ANC’s renewal will form part of the SACP’s discussions during its conference.
“It is a very difficult time. The ANC is not in a good shape at all. Never has our economy been in this state before,” he said. “How do we take our country out of this rot … of state capture?”
Deputy general secretary Solly Mapaila is likely to replace Nzimande as general secretary. Nzimande said he is available to stand for the position of chairperson, which is held by former minister of agriculture Senzeni Zokwana.
The conference is scheduled to wrap up on Saturday, with President Cyril Ramaphosa expected to address delegates on Friday.
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