As the dust settles on another day of frantic exchanges in Parliament, there was a bitter taste left in the mouths of those sitting across from Cyril Ramaphosa, rather than behind him. The president was pushed, at great length, to admit whether the ANC were looking to use prescribed assets and pensions to kick-start the economy.
What are prescribed assets?
It’s the proper term to describe when a percentage of our public retirement savings are used by the government to invest in other projects, with the aim of bringing in a profitable return. However, with suggestions that Eskom could be among the beneficiaries, scepticism is rife.
Ramaphosa eventually clarified that the prescribed assets were indeed being considered for PIC investment, but claimed that – historically speaking – pension investments made towards the infrastructure industry had been successful. Although, this is not a gamble the DA have any faith in.
Ramaphosa mulls pension funds for economic stimulation
DA Chief Whip John Steenhuisen’s reaction to the response was one of utter incandescene: He first called President Ramaphosa a loan shark, then remarked that his indirect response was reminscent of Jacob Zuma.
Geordin Hill-Lewis is a DA MP, and the shadow minister of finance. He released a statement shortly after Parliament had finished, slamming the president for his “dithering” answer. He went one step further, and compared the proposal to something “straight from the apartheid playbook”:
“The President rambled and dithered at first, but when pressed, he all but confirmed that asset prescription will be introduced by his government.The President also threw COSATU under the bus, saying that COSATU supports the view that workers’ pensions can be used by the state through an asset prescription regime.”
“This statement goes much further than any COSATU spokesperson has yet gone. COSATU must now make their position clear: do they stand with the ANC, or with their members? On this matter, they cannot serve two masters. President Ramaphosa’s answer is the closest we have yet come to an official confirmation that asset prescription will be introduced.”
“This is an unacceptable and reckless policy proposal, shamefully taken straight from the apartheid government policy playbook. It should be fought by all South Africans, both those who contribute to a pension fund, and those who are not in work.”- Geordin Hill-Lewis
Prescribed assets: How much are our pensions worth?
It’s worth noting that prescribed assets haven’t been implemented in South Africa since 1989. Around R6 trillion is estimated to be in the pension pot, and it’s the kind of money that has the potential to stimulate the economy. It’s a tactic that works elsewhere in the world, but can the ANC handle such an undertaking?
The jury is out, but the Freedom Front Plus have also issued a statement on the matter. Their Chief Spokesperson for Labour, Heloise Jordaan, blasted the party for heading down a “road to disaster”.
“The so-called interventions to relieve unemployment in South Africa that President Cyril Ramaphosa referred to during a Parliamentary session today will not succeed under the current ANC policy directions. The government is stubbornly forging ahead on a road to disaster, which is paved with thoughtless, self-serving policies.” – Heloise Jordaan
Ramaphosa may gamble with our futures
The plan to raid the “cookie jar” has bene on the radar for a few months. Mike Schussler, of economists.co.za, shared his concerns that the ANC were “eyeing pension assets” in order to keep Eskom afloat back in January. He referred to an article that was written in 2018, warning that the ruling party “wouldn’t be able to keep their hands out of the pot”.
His words may soon become prophetic. Although there are some benefits to using prescribed assets, this whole issue comes down to a matter of trust. With the introduction of NHI on the horizon, and some pretty bleak forecasts for both Eskom and the economy, it seems that our public pensions will be used as Cyril’s stake at the roulette table.