Minister’s pension not necessarily bad – economist

2010-03-05 13:33

 

Economic Development Minister Ebrahim Patel’s idea of using private

retirement funds to help finance development projects is not necessarily a bad

one, economist Mike Schussler said today.

This followed media reports that Patel was exploring ways of

investing private retirement funds in development projects by possibly issuing

development bonds.

“It’s not necessarily a bad idea but you need to be careful that

there is a positive return on the money,” Schussler said.

“In other words the development bond would have to pay more than

inflation.”

Economist Dawie Roodt, however, thought Patel’s idea was

“terrible“.

“Who can guarantee a positive return on the money?” he asked.


“Politicians are not good at identifying winners and here we have

the idea that pension funds be forced to invest five percent of their savings

into a politically determined project.”

Roodt said while he was not against social investment, the correct

vehicle had to be used.

“And the correct vehicle is the Budget of the minister of

finance.

“Patel’s suggestion is nothing more than an additional tax,” he

added.

Roodt said that pre-1994, pension funds had been required to invest

certain portions of their assets in government bonds.

“This was prescribed investment and fortunately we got rid of it,”

Roodt said.


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