Double standards
Households must be encouraged to save, save, save. But government continues to splurge, splurge, splurge
Plans for retirement-fund reform, now reinvigorated by National Treasury, set out to provide a better deal for savers. There’s heavy emphasis on costs, levied by service providers, to ensure that charges don’t unduly erode member benefits. Proposals for improved market conduct, and less opaque products, are proposed too. These are all within the purview of regulation.
Outside this purview, in an entirely separate silo, is the factor that more fundamentally impacts on the deal for savers. It’s investment performance of equity and bond markets, in turn impacted by the rand’s external value. They’re inextricably linked to fund members’ ultimate benefits. Much as government wants to improve retirement outcomes by regulatory reforms, it’s good intent on the one hand is negated by socio-political ferment on the other.
It cannot regulate the latter, but it can do a whole lot more to change investors’ perceptions for the better; particularly foreign investors who own over 30% of SA equities and bonds. When these investors enter with hard currency and exit after conversion from local currency, where hedging for downside protection comes at a cost, they cannot take with equanimity the fall in value of rand-denominated instruments.
Respect for the rule of law (think Bashir), adherence to the Constitution (think mining and property rights), infrastructure constraints (think Eskom), resolution of labour disputes (think Marikana), questionable expenditures (think Nkandla), inefficiency of state-owned enterprises (think SAA, SABC, SAPO, Prasa etc) and bureaucratic nonsenses (think travel visas) are amongst the headline-grabbers.