Patel's apartheid-era pension plan is dangerous and wrongheaded
The recently announced strategic plan of the Minister of Economic Development, Ebrahim Patel that would force all private and public pension funds to invest 5% of their funds into specific state schemes, is a dangerous proposal, which the Democratic Alliance (DA) will strenuously oppose (see here - PDF). Such a move would distort the entire investment allocation of a pension fund.
Such a move would be a return of Apartheid-era financial interventionism, carrying with it severe ramifications for South Africa's financial stability and economic growth. Pension funds are one of the most valuable assets that South Africans accumulate over their lifetimes.
This policy would effectively constitute an additional tax on already hard pressed workers - it forces pension funds into low yielding investments, which means that the amount of money which a pensioner can expect to get out will be significantly lower than without such an intervention.
After a lifetime of saving up money for old age, pensioners will be told that Patel's flaky policy has cost them their standard of living.
Minister Patel clearly has no idea of what he is doing. The plan mentions that "various options are available" for channeling pension funds, and yet the only example he has provided is a "government development bond". There is already a substantial market for government bonds issued by the Treasury and that money is already used for developmental (i.e. infrastructure) spending; so is Patel seriously suggesting a parallel system of government debt? This goes to show that there are no principles behind the proposal - the strategic plan is really a mixed bag of failed interventionist policies.