JOHANNESBURG, Gauteng — Trade unions are intensifying their push for retirement funds to prioritize member benefits through legislated, compulsory investments, commonly known as prescribed assets. This critical issue was championed by COSATU trade unionist Jan Mahlangu during a keynote address at the 70th-anniversary celebration of the SALT Employee Benefits conference in Johannesburg.
Discussions at the landmark event centered on ensuring the retirement industry best serves the interests of fund members and the urgent need to instill greater trust among beneficiaries.
Currently, the retirement investment legal framework is governed by Regulation 28 of the Pension Funds Act. This regulation promotes asset diversification and places specific percentage limits on how much can be invested in equities, foreign assets, and alternative assets. However, a longstanding debate has raged over whether a portion of these funds should be mandatorily invested in local infrastructure priorities, such as energy, water, and other government investment focus areas.
The broader asset management fraternity has historically resisted such mandates, arguing that investment professionals should not be dictated to on where to allocate capital, as this falls under their professional competency. At present, any investment in these developmental areas remains strictly voluntary. However, union leaders are insisting the conversation be revisited to drive economic development and address pressing national challenges.
Jan Mahlangu of COSATU emphasized the need for a serious debate on making impact investments in infrastructure compulsory. He also candidly addressed the primary counterargument to prescribed assets.
“We must have a debate around that,” Mahlangu stated. “Of course, one of the questions that’s going to arise is what we see regarding corruption and all of that. We need to deal with those things because if we don’t address that elephant in the room, those who are anti-prescribed assets are going to say, ‘But how do we deal with it?’ And I would agree with it.”
Beyond investment strategies, the conference also focused heavily on the importance of clear communication with stakeholders across the retirement industry, particularly in providing clarity to the beneficiaries of managed funds. Industry experts warned that poor communication can be extremely costly to members.
Bianca Moyo, a Senior Communications Manager, highlighted that the core problem is not necessarily a lack of communication, but rather that the communication is failing to reach the members effectively.
“For instance, we look at one of the sectors that I’m very passionate about, which is unclaimed benefits,” Moyo explained. “We can all appreciate and agree that there is no member who would forgo their benefit, knowing very well that it is there, especially in an economy where we know that less than 10% of people can retire comfortably. There is no way that a member can forgo their retirement savings knowing very well that there is a benefit due to them. It’s not only an administration gap, but it’s also a communication gap, because it means that member was never told that it’s a benefit due to them.”
Ultimately, retirement professionals at the conference reached a consensus: in all operations, from the employer level right through to the pension fund administrator, the financial interests of the pension fund members must unequivocally come first.
