Is the ANC stealing our pension funds? An expert explains ‘prescribed assets’

In our Friday Finance webinar (see full webinar, below), BizNews editor Jackie Cameron spoke to award-winning financial planner Craig Gradidge of Gradidge Mahura Investments in Johannesburg. As the executive director of a diversified investment advisory and wealth management business, Gradidge is well-positioned to tell us exactly what the ANC plans to do with our pension funds.

In his presentation, controversially titled, ‘Is the ANC stealing our pension funds?’, Gradidge outlined his view on a topic that has many South Africans baying for blood.

“I think anyone who’s lived in this country for the last decade, at least, would understand that there’s definitely a lack of trust between the public and the ANC, given everything that’s come out with state capture and all of the corruption that took place, particularly with state-owned entities,” he says. “So when the ANC now looks like it’s turning the attention towards another pot of money, which happens to be our own money, it becomes a lot more personal than when you pay tax money into a pot and that pot gets raided. You don’t always make the connection between that and yourself.”

Read also: ‘Prescribed assets’ is ANC plan to tap your savings. But don’t panic – Dawn Ridler

Key points on pension funds and prescribed assets:

  1. It will not include prescription which puts us a little more at ease.
  2. Regulation 28 determines the limits. For example, it says you cannot have more than 75% in equity, more than 30% offshore, or more than 25% in bonds. However, the concern with prescription is whether a minimum will be introduced.
  3. Prescribed assets is not new. It was legislated in South Africa in 1958 and the levels of prescriptions were significant, with retirement funds having to invest 53% in government bonds.
  4. Prescriptions are not unique to South Africa. There have been versions in Malaysia, Singapore and Sweden.
  5. If prescriptions were to be introduced, it would be via Regulation 28 of the Pension Funds Act which seeks to protect pension fund members.
  6. It is NOT out of the scope of Regulation 28 for retirement savings to be used for economic growth but there is a clear process that must be followed.
  7. Before changes can be made to Regulation 28, the public will have a chance to see and comment on these changes. Comments are published on Treasury’s website, as well as any changes in wording in response to the public’s commentary.
  8. We do not know if the prescription will be reintroduced – it would be risky to do so. However, the process gives investors time to adjust course if necessary.

Read also: How to rescue your retirement – Magnus Heystek

“I think any knee-jerk reactions to what is currently speculation, and hearsay, and fear… that’s not necessary,” Gradidge concluded.

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