- Finance Minister Tito Mboweni believes that pension funds should be used for infrastructure projects
- This is part of the ANC's post-Covid-19 recovery plan developed by the economic transformation committee
- South Africa is facing a huge shortfall in revenue in the region of R300 billion
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Finance Minister Tito Mboweni believes that pension and retirement fund should be used to fund infrastructure projects across South Africa.
Briefly.co.za learned that he revealed this during a discussion with Parliament's finance and appropriations committees regarding the supplementary budget. This would require an amendment of Regulation 28 of the Pension Funds Act.
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DA MP Geordin Hill-Lewis had asked Mboweni how this would affect the law surrounding asset prescription.
The current law allows for pension and retirement funds to be invested in immovable property. Mboweni wants this to be expanded to include infrastructure according to Fin24.
"There has been a narrow definition from investment managers on how they deal with this regulation," Mboweni said. "Government wants the definition to include immovable property and infrastructure. That is all we wanted to do, try to unlock in the minds of investment managers that they can invest a percentage of their investable funds in infrastructure, in addition to immovable property."
The current percentage allowed to invest in immovable property is 25%, Mboweni has assured
Mboweni's suggestion is in line with draft plans developed by the ANC's economic transformation committee on post-Covid-19 recovery, in which pension funds would be used to finance infrastructure projects.
Deputy Finance Minister David Masondo assured the committees that retirement funds would be safe because the funds will be invested into "safe" projects which would guarantee "returns for savers".
"Retirement funds are safe, there is no intention to change regulation in a way that will sacrifice safety and returns on retirement funds," said Masondo.
The government is facing a huge revenue shortfall of R300 billion of the February budget's target.
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