Fight on the facts
Fight on the facts
Published Date: 2021-02-24 | Source: INCE|Community | Author: Allan Greenblo
Fight on the facts
Retirement funds prepare to resist labour pressures. Mboweni is caught in the middle.
Trade union comrades who linger in the corridors of power probably don't spend too much time researching asset managers' fact sheets for portfolios of retirement funds. If they did, they just might be impressed - a forlorn expectation - by the nature and extent to which retirement funds commit serious money to investment in infrastructure.
So long as there's a populist ring for "monopoly capital" to be vandalized, the putative threat of prescribed assets will shroud in diversion and distortion the optimal means for the growth "flywheel" of infrastructure to be triggered. What the mobilisers of savings need from government is investable projects, not regulatory pushes.
High time, then, that the savings institutions come out fighting: first, again to explain that they are stewards for the capital of others widely inclusive of workers themselves; second, to showcase the funds' activity in a subliminal counter to government's passivity.
Many months have passed since President Cyril Ramaphosa announced that government would expedite at least 50 "shovel-ready" infrastructure projects with a total investment value of R350bn. In addition to what funds do individually, scale requires that they also act collectively.
It's in the identification and financing proposals for mega-projects that government plays a facilitation role. This implies agreement on risk-reward returns, that funds will welcome, as opposed to below-market compulsion, that funds will be obliged by mandate to resist.
It's bizarre in this day and age that the prospect of prescribeds continues to lurk in the context of mooted but unspecified revisions to Regulation 28. The intention is ostensibly to increase exposure by retirement funds to infrastructure. From the way that Reg 28 stands, however, it isn't clear what revisions are necessary.
But because the prospect of prescribeds does lurk, and because of the unavoidable damage they would cause to savings, retirement funds are moving to hold the line. Preparations are in progress.
Towards the middle of last year, at the presidential summit, infrastructure was all the rage for public-private partnership to spur growth. In the presence of Ramaphosa, there was no shortage of professed enthusiasm. The shortage was in the detail, the timelines and the commitments. Now there's action from the funds themselves.
To hack through the complexity of terms and choices, after the summit the Association of Savings & Investment SA produced a standard that sets out the definition, classification and statistics for infrastructure investment. This was so that ASISA members - mainly retirement funds and life offices -- would be able to report uniformly on their diverse involvements.
It's recognized that pooled and segregated portfolios cannot operate identically. Under the auspices of industry body Batseta, two fora a have been set up. Funds with pooled portfolios (such as commercial umbrella funds and retirement annuities) are represented by the Commercial Fund Forum and those with segregated portfolios by the Asset Owners Forum.
They both support a voluntary increase in infrastructure investing up to "appropriate industry-agreed aspirational levels within agreed timelines determined by the participants and should form part of any industry compact".
Further, it's proposed that development work will be required to prepare the market for efficient growth and scale of infrastructure investing: "This will include further communication and consensus-building between retirement funds, their members, their employers and asset managers and sponsors."
They ask funds to report on the level of infrastructure investments in their portfolios, using the ASISA taxonomy, and to indicate in principle whether they support the Batseta infrastructure initiative. These reports they want by late February or early March.
Note the timing, right on finance minister Tito Mboweni's 2021 Budget.
- Allan Greenblo is editorial director of Today's Trustee (www.totrust.co.za), a quarterly magazine mainly for the principal officers and trustees of retirement funds.