Stop the political abuse of employees’ pension money
3 March 2020
Hardworking employees’ pension money has been abused for political aims which have already cost pension fund members billions of Rands. This prejudice in many cases boiled down to wastage and even to legalised looting. That is the main reason why only approximately 6% of employees can retire knowing that after a lifetime of hard work they will have enough money to live comfortably when they retire. The South African pension industry is the country’s largest asset and represents the savings of approximately 17 million members to the amount of more than R4,262 million.
The first abuse was the dilution of pensions by companies dishing out free shares to political-related tycoons according to BBBEE laws and codes. In practice, it meant that poor pensioners’ money was transferred to rich empowerment tycoons and was redistributed. In this way, individuals were empowered to the detriment of millions of ordinary employees’ pension money.
The second abuse was the tax on pension money from 1996 to 2006 during which pension fund members lost to tax in the region of R50 billion. Fund members suffered a total loss of more than R120 billion as a result of this.
The third abuse is the limit of 30% which regulation 28 of the Pension Act placed on foreign investments. This resulted in fund managers not having the freedom to invest fund members’ money in the best investments because they were forced to invest the money in the SA Stock Exchange. The problem is that the SA Stock Exchange constitutes only 1% of global stock exchanges and that fund managers cannot diversify properly.