Media release: Retirement fund announcement reflects a doomsday mentality

Media Release
19 October 2020

Comment from Leon Louw - Free Market Foundation

Retirement fund announcement reflects a doomsday mentality

Background
The Parliamentary Finance Committee was told on 13 October 2020 by Treasury and SARS that South African emigrants have until 28 February 2021 – just 4 months – to get retirement funds out or face a three year lock-in. This will intensify exchange control when it should be scrapped. It is a desperate measure by a government facing a self-imposed fiscal cliff. Apartheid-style prescribed assets will follow.

Comment from Leon Louw

This move, like too many others, reflects a doomsday mentality amongst the people we rely on to encourage optimism. It manifests a desire to discourage much needed wealth and skills. Why, they should ask, is emigration (personal and financial) the problem rather than, as in attractive countries, immigration?

At a time when self-defeating expropriation without compensation is envisaged, freezing private property is being added to a growing list of anti-prosperity policies. It directly contradicts what President Ramaphosa promised in the Economic Recovery Plan.

There is no appreciation of the fact that forex (foreign exchange) control is Neanderthal. Most countries, even poor countries like our SADC neighbours, abandoned it (or most of it) long ago. We are being taken back to the past. We suffer under the yoke of an ever-tightening apartheid relic, imported from Hitler’s Nazi regime during the 1960s as an oppressive apartheid measure. That it will be perpetuated, even intensified, manifests a love affair by the formerly oppressed with policies of former oppressors.

When they (Treasury) say vacuously that they want the system “modernised”, what they mean is “fossilised”.

It is likely to be followed by the next anti-prosperity apartheid idea, “prescribed assets” – reallocation of assets from wealth-creation to wealth-consumption.

The most important question is why they think the measure will keep more money in than out. A former Governor of the SARB, Chris Stals, concluded that forex control works when you don’t need it and fails when you do. Surely everyone knows this by now.

New policies must be preceded by Socio Economic Impact Assessments (SEIAs). None has been undertaken. For that reason alone, the idea should be ditched. A properly conducted SEIA includes quantified estimates of impacts, especially “unintended consequences”, such as the effect this message sends citizens and investors, namely, get out and stay out.

End