RETIREMENT REFORM

Hard questions

Or is it really that they’re hard to answer? Try for yourself.

Masilela . . . social contract at the core

Treat these as brainteasers, if you will, but in reality they’re much more. They go to the heart of social-contract issues vital to successful outcomes of the pension-fund reform programme. Compiled by Elias Masilela (then of Sanlam, now PIC chief executive), they were to have been put to panellists at the conclusion of the ASISA/Actuarial Society conference late last year. Unfortunately, with drinks beckoning, time ran out before discussion got underway.

Responses are still invited from the panellists themselves or any interested parties wanting to
contribute, for the debate remains open and is encouraged. TT will be happy to publish respective
views, the more diverse and provocative the better. The intended panellists and questions were:

Sam Tsiane
(National Union of Metalworkers/Cosatu)

• The social contract resonates with organised labour. How do you understand what a social contract actually means?
  
  
• How do we as a country apply it and how does labour in particular contribute to its successful application?
  
  
• Growth and sustainable jobs are critical for successful implementation of the contract and
  rollout of the social security and retirement reform. Labour market flexibility has been found as a critical underpin for this success in other countries. What is your position in this regard?
  
  
• Because long-term savings are critical for the livelihood of our people, would you support
  compulsion and preservation (of pension savings until retirement age) and under what conditions?
  
  
• What is the view of labour on the choice between defined-contribution and defined-benefit funds?
  
  
• Education is essential. How can labour contribute in the education and the improvement of financial literacy amongst our people?
  

Andrew Donaldson (National Treasury)

• What are the right institutional arrangements, to
  ensure a successful rollout of reform, that need to
  be considered within the context of the current
  state of government as well as its relationship with
  the private sector?
  
  
• How does government deal with the seeming
  contradiction between increasing needs for social
  assistance and fiscal constraints?
  
  
• What would you think is the biggest challenge for
  our reform?
  

Colin Dutkiewicz (Independent actuary)

• What would be the quantifiable impact of social security interventions on the life expectancy of the poor?
  
  
• What is the risk of national health insurance being dealt with in isolation of the broader social security plans?

David O’Brien (Old Mutual)

• What is the role of the financial sector in the social security and retirement reform programme?
  
  
• What is the role of investment and what is the risk of asset prescription for the delivery of the reform?

Viviene Taylor
(Head of UCT Dept of Social Development and member of National Planning Commission)

• To what extent have African heads of state taken economic stability into account when pronouncing on the continental programme (African Union Strategy on Social Protection)?
  
  
• To what extent have they given this programme their political support and commitment, within the context of ensuring that sound economic management underpins successful reforms?
  
  
• What political credibility do the governments command to enforce decisions such as compulsion (to preserve pension savings until retirement age)?
  
  
• What do you see as the right and requisite social contract for SA?
  
  
• What have been the challenges of low literacy and underdeveloped financial markets for African economies in the implementation of social security and retirement programmes?

Edward Whitehouse (Organisation for Economic Cooperation & Development)

• SA, as a country, has been consulting widely over the years in this reform area. A recommendation thrown at SA by the Harvard Group is a choice between economic growth and jobs, on the one hand, and retirement reform on the other. It has literally indicated that it does not fully comprehend why SA was pursuing reform at this stage instead of focusing on job creation. What would be your advice?
  
  
• What political choices did OECD economies have to make, going through their early developmental processes? What can we learn from these? There’s the gauntlet. Start stirring! As Masilela says, it can only help to “craft the requisite and most effective environment” for the road ahead.