Minister of Trade and Industry, Ebrahim Patel says partnerships with retirement funds can help boost GDP growth and returns to pensioners.
Speaking at a Council of Retirement Funds for South Africa in Johannesburg on Monday (10 June), Patel said retirement funds are an essential part of South Africa’s capital market environment.
“Aside from underpinning equity and debt markets, they have a role to play in the development of South Africa through investment in real assets. Government’s investment drive is looking not just to Foreign Direct Investment but also and very strongly to domestic investment to stimulate economic growth,” he said.
He added that the aggregate assets of retirement funds in South Africa was R4.2 trillion, according to the 2017 Registrar of Pensions Funds Annual Report, with the GEPF accounting for 40% of the total.
“The size of the retirement funds’ financial holdings mean that their decisions have a huge impact on the national economy.”
Support private sector investment
Patel also called on trustees to support increased private sector investment in the economy.
“You have the responsibility towards your members to help lift the long-term rate of growth of the South African economy as a key means of realising the pension promise,” he said.
“Pension Fund investments, because it is so large, generally track the performance of the SA economy, which is your investment universe.
“A sluggish economy impacts directly on the performance of your overall portfolio. A growing economy lifts your entire portfolio, hence helping to increase both the value of, and the annual return on the portfolio, to the benefit of retirement fund members,” he said.
Patel said that fund managers should also take a longer-term perspective on returns. He pointed to investment opportunities off the back of the Continental Free Trade Agreement that recently came into force.
“There is a market of a billion customers that can be used to provide significant new investment opportunities,”he said.