Issue: June 2012 / August 2012


National Treasury’s estimates that only 10% of South Africans are able to maintain their pre-retirement levels of consumption after they stop working. Only? It’s worse.

It would be only those who’ve participated during their working lives in retirement funds and who’ve preserved their benefits when changing jobs. In other words, a minority of a minority.

It gets still worse. NT doesn’t say for how long most of this minority’s minority will be able to maintain their pre-retirement consumption levels. A few years? Okay. A decade or two? Surely not.

Unless, that is, they have sufficient capital to keep it intact. Or markets infinitely zoom upwards. Or increases in investment returns continue to outpace projections for increased longevity. Otherwise we’re speaking of a minority of a minority of a minority.

Despite its excessive verbiage, it’s worth reading The Second Transition? paper tabled for discussion at the ANC national policy conference. It defines issues of economic policy that are clearly top-of-mind amongst powerful elements in the ruling party.

My suggestion to read it applies exclusively to South Africans whom the authors want to “challenge and engage”, not to foreigners who’re thinking of investing here. They’ll be scared witless.

Business Day editor Peter Bruce wants a stakeholder democracy where “every citizen has a personal stake in our economic wellbeing”. By the issue of shares in larger companies to their workforces and equity vouchers in state-owned companies to the unemployed, he argues, companies would become more competitive by these new shareholders holding bosses to account if they don’t pay dividends.

Ah yes, but do recall how quickly individuals cashed in the shares they received from the Old Mutual and Sanlam demutualisations.

And if we don’t already have the “stakeholder capitalism” Peter wants, it’s largely because members of pension funds don’t push their trustees to vote at shareholder meetings of the JSE-listed companies that they substantially own.

The problem isn’t withthe system. It’s with the people.

Still hanging is the little matter of curators using their own law firms to pursue litigation on behalf of a pension fund. When the curator loses, as recently in the South Gauteng High Court over the Picbel group fund, guess who picks up the fees and who the costs.

It’s a win-win, both for the same party which is neither the fund nor its beneficiaries.

In cricket, the first testicular shield (“box”) was used in 1874 and the first helmet in 1974.

It thus took 100 years for men to realise that their brains were as important as their balls.