Genesis Analytics cautions against prescription in the pension fund investment industry

The debate over the role of pension funds in furthering South Africa’s developmental needs surfaced at the ANC policy conference in Midrand in June 2012. In a policy discussion document on state­ owned entities it was suggested that the large asset base comprising pension fund investments be leveraged for national development.

In an interview with Business Live, Ryan Short, a partner at Genesis Analytics, cautioned against prescribing which assets pension funds invest in.

Mandatory investments, potentially realising lower returns, would ultimately impact ordinary South Africans negatively as the value of their pension savings would be eroded over the long term.

Rather, developmental projects with good returns, representing sound investments, should be brought to the market such that pension funds are incentivised to direct funds towards these investments.