(Getty Images/Brian A Jackson)
Recent discussions around mandating pension funds to support government projects have raised concerns about market returns and retiree outcomes, according to a Financial Sector Conduct Authority official. The ANC’s proposed introduction of prescribed assets, supported by Minister Parks Tau, has sparked debate within the financial sector.
Deputy Finance Minister David Masondo reassured that the government will respect pension funds’ investment mandates. However, the regulator remains firm in its opposition to proposals that could compromise market stability by directing pension funds towards specific investments.
The pension industry has expressed apprehension about prescribed assets, citing potential risks to fund performance if directed towards under-performing state-owned enterprises. The Financial Sector Conduct Authority emphasized the importance of trustees’ fiduciary duty in managing pension funds responsibly.
South Africa requires substantial infrastructure investment from both public and private sectors to achieve its development goals by 2030. The regulator advocates for promoting bankable projects to attract pension fund investments while steering clear of prescribed assets as a solution. Maintaining a stable policy environment is crucial for enhancing pension portfolio returns.
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