ANC planning to use pension funds to launch state-owned bank

ANC planning to use pension funds to launch state-owned bank

- A report has emerged that the ANC is planning on creating a state-owned bank using pension funds to capitalise the institution

- This is part of the ANC's recovery plan which is geared towards improving the economy and investing in infrastructure projects

- The is the risk that the project could erode pension funds through investments in projects managed by the government

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Reports have surfaced which reveal that the African National Congress (ANC) is working on plans to create a state-owned bank which will use pension funds to gain access to favourable rates.

A report published by the Sunday Times on Sunday Augst 16, which revealed that the ANC has developed a recovery plan and one of the efforts involved would be an effort to invest in state infrastructure.

Briefly.co.za learned that this would facilitate the creation of a new state bank which would use pension funds to capitalise the institution.

The Sunday Times report exposed the proposed document which appeared in the ANC's recovery plan which was developed during meetings held between the NEC (National Executive Committee).

ANC planning to use pension funds to launch state-owned bank

Tito Mboweni is South Africa's Minister of Finance. Photo credit: @GCIS/Flickr
Source: UGC

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“Processes, already under way, to establish a properly capitalised and governed state bank will be accelerated,” the document says – according to the national newspaper.
“The state bank will be able to access different forms of capital, in addition to taking deposits. [It] has a critical role to play in deepening financial inclusion and to further enhance competition in the banking sector.”

The ANC has been working on a plan to create a state-owned financial institution for some time. This could result in the erosion of the pension fund through investments into projects managed by the ANC.

The report reveals that a significant amount of work has gone into developing the recovery plan which hopes to help the country bounce back from its recent economic challenges according to The South African.

“Regulation 28 of the Pension Funds Act will be amended in order to unlock the funding of long-term infrastructure projects and high-impact capital projects, and the amendment will facilitate direct access to pension funds’ pool of resources by state development finance institutions,” the document says.

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Earlier, Brtiefly.co.za reported that Finance Minister Tito Mboweni believes that pension and retirement fund should be used to fund infrastructure projects across South Africa.

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.

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.

In other news, the ANC’s Economic Transformation Committee has published a new proposal document which includes planned changes to how pension funds will work in South Africa.

The document has outlined how the use of pension funds will be important in helping the government address funding shortfalls in areas such as infrastructure development and energy production.

To achieve this, the ruling party has proposed changing regulation 28 of the Pension Funds Act in order to boost the funding of infrastructure projects led by the state development finance institutions (DFIs) using private capital.

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Source: Briefly.co.za

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