Treasury rejects claims that it plans to use pension money to fund government

The Treasury has again rejected suggestions that it intends making amendments to Regulation 28, that will allow it to use pension funds to fund government programmes.

Regulation 28 of the Pension Funds Act directs how money in retirement funds can be invested.

The Treasury was briefing various committees of Parliament on Finance Minister Tito Mboweni‘s supplementary budget.

The issue of prescribed assets has always sparked controversy and uncertainty.

The suggestion that the government might be considering using pension funds to fund its programmes, was again raised by the Democratic Alliance (DA) during the Treasury briefing.

This was after it emerged that Finance Minister’s speech that dealt with Regulation 28, was removed from his speech at the last minute.

In this video below, Minister Tito Mboweni delivers virtual Supplementary Budget speech to Parliament:

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But both Finance Minister Tito Mboweni and his deputy David Masondo tried to re-assure lawmakers about the safety of pension funds.

They both explained what the Treasury is seeking to do with Regulation 28, but they insist that the intention is to save and protect pension funds.

Another bone of contention was a $4.2 billion loan the government is applying for from the International Monetary Fund (IMF).

However, several lawmakers insist the loan will compromise the country’s sovereignty.

Their argument is that conditions such as structural adjustments, which normally come with IMF loans, have in the past bankrupted their recipients.

But the Treasury says the loan it seeks from the IMF, will have no such conditionality.

Treasury Director-General Dondo Mogajane says: “We should be clear, we are not going to be giving up any sovereignty, broad things that we have agreed to in the past.”

Other local and international institutions have also been approached for financial assistance.

Mboweni says the country will have to marshal all available resources in order to stimulate growth.