|The Minister of Trade and Industry, Mr Ebrahim Patel says partnerships with retirement funds can help boost GDP growth and returns to pensioners.
Minister Patel was delivering a keynote speech at a conference hosted by Batseta – the Council of Retirement Funds for South Africa in Johannesburg.
Minister Patel said retirement funds are an essential part of South Africa’s capital market environment, and the role they play, including that of trustees and Principal Officers, needs to be better appreciated.
“Aside from underpinning equity and debt markets, they have a role to play in the development of South Africa through investment in real assets. Government’s investment drive is looking not just to Foreign Direct Investment but also and very strongly to domestic investment to stimulate economic growth,” said Patel.
He noted that the aggregate assets of retirement funds in South Africa was R4,2 trillion, according to the 2017 Registrar of Pensions Funds Annual Report, with the GEPF accounting for 40% of the total.
“The size of the retirement funds’ financial holdings mean that their decisions have a huge impact on the national economy,” added Minister Patel.
Addressing pension fund trustees, Minister Patel called on them to ensure good governance.
“First, and fundamentally, you have a fiduciary responsibility to ensure that governance is strong, to hold fund management accountable, and to ensure that there is no mismanagement, corruption or looting of the hard-earned money of workers and pensioners. This responsibility requires on-going training of trustees, learning from best-practice and constant vigilance. The economy cannot keep paying the huge price of governance lapses at public entities like Eskom or private entities like Steinhoff,” he said.
He called on trustees to support increased private sector investment in the economy.
“You have the responsibility towards your members to help lift the long-term rate of growth of the South African economy as a key means of realising the pension promise. Pension Fund investments, because it is so large, generally track the performance of the SA economy, which is your investment universe. A sluggish economy impacts directly on the performance of your overall portfolio. A growing economy lifts your entire portfolio, hence helping to increase both the value of, and the annual return on the portfolio, to the benefit of retirement fund members,” he said.
Minister Patel called for fund managers to take a longer-term perspective on returns. He pointed to investment opportunities off the back of the Continental Free Trade Agreement that recently came into force.
“There is a market of a billion customers that can be used to provide significant new investment opportunities,” he said.
“Batseta could play a role in the development of effective and clear dashboards and guidelines used by Trustees to ensure there are prudent parameters in place, to measure how well fund managers are carrying out these mandates and to compare performance across funds. Ensure you have robust systems to avoid capture by narrow interests or susceptibility to lobbying on projects that have no intrinsic merit,” he said.
Batseta leadership welcomed Patel’s invitation to engage with government after State of the Nation Address to share details of the new Administration’s vision and action and promote long-term, sustainable development.
Batseta, which was established by three trade union federations, namely Congress of South African Trade Unions (Cosatu), Federation of Unions of South Africa, (Fedusa) and the National Council of Trade Unions (Nactu), as well as the Principal Officers Association, and subsequently Business Unity South Africa and various independent industry experts, represents the top 100 retirement funds in South Africa.
Minister Patel addressing Batseta conference
Sidwell Medupe-Departmental Spokesperson
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Mobile: 079 492 1774
Issued by: The Department of Trade and Industry
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