Appearing before Parliament on Thursday, President Cyril Ramaphosa called for a "broad and wholesome" discussion around prescribed assets, which could oblige retirement funds to invest in state-owned enterprises.
Here is what you need to know.
1. What are prescribed assets?
The term 'prescribed assets' refers to a policy where the state obliges institutions such as pension funds and insurance companies to invest a part of their funds in state institutions or bonds.
For detractors, prescribed assets are a way for the state to raid retirement funds to prop up unattractive investments, such as heavily indebted state-owned entities. They warn that obliging funds to invest could artificially distort the market by diverting funds away from more appealing investments.
For supporters, the requirement to invest in specific state institutions or bonds is a quick way to boost the flow of funds to important entities, which can help grow the economy and create jobs.
2. Why are they in the news now?
The ANC resolved at its 2017 national at Nasrec – where Ramaphosa was elected ANC president – to investigate a "new prescribed asset requirement" to ensure that a "portion of all financial institutions' funds be invested in public infrastructure, skills development and job-creation". This call was renewed in its 2019 election manifesto.
The inclusion of the resolution – one of many in the party's 2017 report - was an important new development. While prescribed assets had been floated in the past, there had not been serious moves to investigate their reintroduction after the apartheid-era Act on Prescribed Assets was done away with in 1989.
In June 2013, for example, in response to a Parliamentary question, then-Minister of Finance Pravin Gordhan said it was "not government policy to tell pension funds how to invest".
Prescribed assets were not mentioned in resolutions from the ruling party's 2012 Mangaung conference or in its 2014 election manifesto.
3. Does the government have an official prescribed asset policy?
No. This is why the ANC's 2019 election manifesto is referred to so often.
In a speech before Parliament on Thursday, President Cyril Ramaphosa called for a "broad and wholesome" discussion around the issue.
Ramaphosa said the question should be how "various resources in SA" could be utilised to "generate growth in a purposeful manner".
"In the end we will pursue policies that advance the interest of our people here in South Africa and also advance the interest of pension fund holders," he said.
Opposition party the DA, in response, said that Ramaphosa's answer was the "closest we have yet come to an official confirmation that asset prescription will be introduced."
"This is an unacceptable and reckless policy proposal, shamefully taken straight from the apartheid government policy playbook," said DA MP and the party's spokesperson on finance, Geordin Hill-Lewis.
4. What are asset managers and economists saying?
Janina Slawski – principal investment consultant at Alexander Forbes Investments – noted in a report in June that if investors have to invest in specified assets, this will generally lead to "sub-optimal" investment outcomes.
Investors won't be able to negotiate better terms for investment or "walk away" if they don't think terms are favourable, she said.
"The introduction of prescription and the potential reduction in investment returns would leave members poorer, contrary to the positive changes achieved to date through the Retirement Reform initiatives," Slawski warned.
"Trustees of retirement funds have a fiduciary duty to act in the best interest of members, and prescribed assets will limit the extent to which trustees can fulfil these roles."
Slawski said that there should be a process of extensive consultation before requirements for the prescription of assets are enforced through legislation.
Magda Wierzycka, the CEO of Sygnia, said earlier in the year that prescribed assets were a "blunt instrument".
She said that while they could fill the "immediate gap in the funding of bankrupt SOEs", they would also "divert investments away from the funding of corporates that create jobs and contribute to growing the economy".
"It will also affect the revenue derived from the taxation of such corporates, so what is taken to fill one bucket empties another," she said.
Investec chief economist, Annabel Bishop, in a report released in July, said the prescription of assets could have implications for government debt and the country's credit rating.
"A prescribed asset policy is dangerous in an environment where government and SOE finances have been materially deteriorated, as pensioners can risk losing their pensions, especially if further financial deterioration occurs," Bishop warned.
"The persistence of pursuing prescribed assets as a government policy should be examined, as such a policy could have unintended consequences over and above that of further expanding SOE and state debt, and so engendering a credit rating downgrade for the country from Moody's," she added.
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5. When will we have clarity?
With government calling for more discussion, and no policy papers out yet, it is too early to say, how, when, or if the state will proceed with prescribed assets.
ANC Alliance partner Cosatu has said that, in principle, both public and private funds should be required for investment in government bonds for the development of the state, with the caveat that there should be conditions attached to the investments to prevent looting and ensure depositors are protected.
Old Mutual, meanwhile, has said that the "devil certainly will be in the detail".
"The definition of prescribed assets and the practical implementation thereof will be crucial to assure South Africa’s savers that their savings will remain secure. Until we have more clarity, we at Old Mutual Corporate Consultants do not believe that there is any reason to panic."