New pension changes proposed for South Africa

 ·3 Nov 2021

The National Treasury has published amendments to Regulation 28 of the Pension Funds Act for public comment.

The changes primarily deal with pension funds investing in infrastructure and include new restrictions around investing in cryptocurrencies.

In March 2021, the Treasury published its draft amendments to Regulation 28 of the Pension Funds Act for public comment, detailing the projects in which South African pension funds could soon invest.

Treasury said that the proposed review of Regulation 28 is informed by calls for increased investment in infrastructure given the current low economic growth climate.

The amendments proposed that the overall investment in infrastructure across all asset categories may not exceed 45% regarding domestic exposure and an additional limit of 10% in respect of the rest of Africa.

The proposed Regulation 28 amendments use the same definition for infrastructure as the Infrastructure Development Act of 2014. Under this Act, infrastructure includes installations, structures, facilities, systems, services or processes which are strategic integrated projects or part of the national infrastructure plan.

However, Treasury said that it has since received several comments and complaints around these proposed changes, with a new draft amendment bill aiming to address these and other issues.

The updated changes are outlined in more detail below.

A new definition of ‘infrastructure’

Treasury has expanded its definition of ‘infrastructure’, which was previously limited only to part of the national infrastructure plan, which excludes private sector infrastructure and infrastructure in the rest of Africa or abroad.

The revised definition is that infrastructure is ‘any asset class that entails physical assets constructed for the provision of social and economic utilities or benefit for the public’.

“This definition takes better account of the United Nations’ Principles for Responsible Investment (UNPRI) and the input from Association for Savings and Investment South Africa (ASISA),” it said.

“The ‘social’ aspect of the definition will accommodate impact investing by retirement funds. Impact investments are investments made to generate positive, measurable social and environmental impact alongside a financial return.”

Infrastructure limits 

The second area of concern was around the infrastructure limits set out in the regulation. Some submissions argued the limits were too low, and others that the limits were too high, or the adjustments were not going to impact infrastructure investment by retirement funds.

“A further comment was that the infrastructure columns introduced in the first draft caused confusion and that it was more important to deal with the availability of bankable projects for retirement funds to invest in,” Treasury said.

“The revised draft removes the infrastructure columns. However, the overall investment in infrastructure across all asset categories will be kept at 45% in respect of domestic exposure and an additional limit of 10% in respect of the rest of Africa.”

Onerous reporting 

The first draft regulation required retirement funds to provide reports on their investment in infrastructure. Some respondents perceived this requirement to be too onerous.

The second draft eases the reporting requirements and provides for reporting only on the top twenty infrastructure investments by a retirement fund.


A new restriction in Regulation 28 on retirement funds’ investment in crypto assets has been introduced because they are seen to be of very high risk, Treasury said.

“This restriction is in line with the Intergovernmental Fintech Working Group (IFWG) policy proposal of not allowing collective investment schemes and pension funds to have exposure to crypto-assets be maintained until further notice.”

Read: Proposed new grant for South Africa under question: report

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