The resurrection of a seven-year-old agreement between business, government and labour - that retirement funds would set aside 5% for developmental investments - has the industry buzzing.
Its revival by economic development minister Ebrahim Patel has come in response to a pressing question: how will the new economic growth path Patel is formulating be funded?
Patel says he is reluctant to talk too much about the investment instruments he would like to see created, but there are two discernible elements.
The first is a government development bond, which would be the same as other government bonds, except that it would be linked to funding a particular project. To be practical, it would need to have a yield no lower than a benchmark bond.
The second is a mechanism that would feed capital into the state's development finance institutions - such as the Industrial Development Corp or Development Bank of Southern Africa - and allow them to lend to both private and state-owned entities at concessional rates. These investments would also be guaranteed by the state.
The initial agreement on setting aside 5% of "investable income" of savings funds was made at the Growth & Development Summit in 2003 and backed up by a conference of pension fund employee trustees, says Patel.
"Commitments were made but we need the instruments. That is the gap," he says.
"We need to give trustees a series of instruments that would allow them to say we are making these commitments, when they make choices on how to balance their investment portfolios."
Such instruments could be made available to both private retirement funds and public ones, in particular the Government Employees Pension Fund (GEPF) with its R780bn in assets managed by the Public Investment Corp.
At present, 5% of funds are reserved for its Isibaya Fund - a developmental, infrastructural fund - but the GEPF board has in the past two weeks formulated a new investment strategy.
The giant pension fund could lend to the development finance institutions, which in turn could lend to state-owned enterprises.
National treasury deputy director-general Andrew Donaldson is enthusiastic about Patel's proposal, which, he says, could be a catalyst to finding new ways of funding infrastructure.
The fact that Eskom's capital build programme is still not fully funded - there is at least R14bn shortfall - is an illustration of the problem.
"The discussion now has to move beyond principles to processes," Donaldson says.
A possible form of engagement could be an annual investment conference at which borrowers - governments and state-owned entities - table their plans and investors signal interest and raise concerns.
For the retirement fund industry, the big question is whether the instruments that government devises make good investment sense.
Patel thinks so. "Some of these instruments might make it easier for trustees and asset managers to ensure that portfolios are a lot more balanced.
"During the bull run on the stock exchange, many asset managers were content to track the stock exchange. We've seen a lot of pension fund value destroyed... that opens the possibility for a wider discussion."
The Association for Savings & Investment SA is optimistic. Says deputy CEO Peter Dempsey: "Government paper is triple AAA rated and pays market-related returns. That is the kind of investment that retirement funds would look at."
Jan Mahlangu, Cosatu's social co-ordinator and a retirement funds expert, says the federation's trustees are strongly in favour of putting developmental goals at the top of the list of an investment strategy.
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