Forced pension fund investments in SOEs could lead to court challenge
Prescribed assets violate property rights, says Futuregrowth's Andrew Canter
Any attempt by the government to force pension funds to invest in bankrupt state-owned companies is likely to spark a Constitutional Court challenge, says one of SA’s largest fixed-income lenders. In its election manifesto released at the weekend, the ANC said it would "investigate the introduction of prescribed assets on financial institutions’ funds to unlock resources for investments in social and economic development". This could result in pension funds being forced to invest a portion of their funds in state projects. The proposals come at a time when state-owned companies such as Eskom are struggling to raise finance from the private sector after years of looting and mismanagement left them on the brink of collapse. SA Airways has been left in such a dire position that finance minister Tito Mboweni has suggested the country would be better off closing the airline. Prescribing to pension funds, which are responsible for managing the savings of millions of workers, would be dest...