The Congress of South African Trade Unions (COSATU) welcomes the amendment of Regulation 28 to allow pension funds the opportunity to invest in infrastructure projects. This will provide a welcome boost to infrastructure investments.
South Africa’s infrastructure is aging and needs significant injections to repair, maintain, overhaul and expand. The consequences of aging infrastructure from energy to water, roads to rail, health to education, police to prisons are evident. Deteriorating power stations, rail, ports and roads are a burden to the economy and a threat to millions of jobs. Overwhelmed public infrastructure e.g. water, schools, health care institutions endanger lives and livelihoods.
The fiscus will never have sufficient funds to generate the kind of infrastructure necessary to grow the economy, create jobs, deliver quality public services that the nation needs. No amount of tax increases will be sufficient either. Allowing room for pension funds to be invested in infrastructure will provide a highly needed stimulus to the economy.
Previous investments in infrastructure opportunities through government bonds have proven to be highly lucrative for pension funds and have often delivered better returns on investments to pension funds and workers than investments in listed and unlisted companies.
In order to meet pension funds’ investment mandates and requirements, it is critical that these infrastructure opportunities are insulated from corruption and provide an acceptable return on investments. It is critical that these investments champion local procurement and job creation. For too long, workers’ pension funds have been used as a cash cow by fund administrators and companies with little benefit to workers. These are workers’ hard-earned wages and it is critical that they benefit the workers they belong to through healthy growth in their pensions and benefit workers in general by helping to create sustainable jobs and provide urgently needed infrastructure and goods critical to the economy.
Issued by COSATU
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