Behind unions’ new caution on prescribed assets
Organised labour, which has championed the notion of prescribed assets for pension funds in the past, says that high levels of corruption mean that workers must be cautious about how their funds are used by the state.
Labour federation and ANC alliance partner Cosatu, which has been at the forefront of the campaign calling for the imposition of legal requirements that pension funds dedicate a set portion of their portfolio to investment in the state, is now calling for caution on the adoption of the ANC proposal.
In its manifesto, launched in Durban two weeks ago, 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".
Should the ANC receive a mandate during the upcoming elections and go ahead with this plan, the country’s savings pool could be used towards funding state-owned entities (SOEs) as well as housing and infrastructure. However, on Monday, Cosatu parliamentary co-ordinator Matthew Parks told Business Day that Cosatu would not allow pension funds to be used as "petty cash for the state". He emphasised Cosatu’s long-standing position that it supports investment in social and economic development such as infrastructure, but said the backing was conditional.
"As long as it is done in a way that, number one, guarantees healthy above-inflation growth of the investments and pensions, and two, is sustainable. Prescribed asset investments must be transparent and protected from corruption," Parks said.
The Public Service Association (PSA), which has taken on the Public Investment Corporation’s (PIC’s) alleged dubious dealings and the loss of worker monies through the Steinhoff debacle, has also taken a cautious approach. The PIC invests R2-trillion on behalf of the Government Employees Pension Fund and Unemployment Insurance Fund.
"The PSA has on numerous occasions expressed its concern about investments in SOEs that fail to generate returns on investments. The PSA has furthermore called for a clean-up of SOEs’ managements to root out corruption that has been a root cause of poor performance," said PSA assistant GM Reuben Maleka.
The SA Federation of Trade Unions said while labour had campaigned for the introduction of prescribed assets, it was worried "about the levels of corruption and certainly do not want to open another trough".