Category Retirement
SUB CATEGORIES Annuties |  General |  Savings & Investments | 

Regulatory update – Impact of the offshore limit increase on retirement portfolios

07 June 2022 Wesley Davids, Executive: Governance at PPS

In South Africa, retirement fund investments are required to comply with Regulation 28 of the Pension Funds Act.

Regulation 28 limits the extent to which retirement funds may invest in asset classes, particularly those asset classes which are considered to have a greater degree of market risk associated with them. The main aim is to protect the members’ retirement fund investments from inadequate diversification and to ensure that it is not exposed to undue market risks. Members of the PPS Retirement Funds may invest in Collective Investment Schemes (CIS). In order to be considered Regulation 28 compliant, CIS must comply with the asset exposure limits set out in the Regulation 28 and foreign asset exposure limits as determined by the South African Reserve Bank (SARB).

Changes to these limits were first announced during the 2022 National Budget Speech on 23 February 2022. Thereafter, on 25 February 2022 the SARB published the Exchange Control Circular No. 10/2022, which detailed changes to the prudential foreign investment limits for South African institutional investors, in that foreign exposure of all retail assets, such as pension funds, may not exceed 45%.

It’s important to note that the recent prudential limit increase is not directly related to the proposed amendments to the Regulation 28 of the Pension Funds Act, issued in terms of Government Gazette No. 45396 of 2021, which is focused on pension funds’ ability to invest in infrastructure, hedge fund of a CIS and crypto assets.

Off the back of these changes, a Regulation 28 compliant CIS portfolio will now be permitted to have aggregate exposure, as shown in the table below.

Asset class

Previous exposure limit

New exposure limit










Listed Property 



Private Equity Funds





Combined with offshore limit

Hedge funds 



Other Assets[1]




Impact of change to offshore limits
Regulation 28 compliant CIS portfolios will be permitted to invest up to 45% of the portfolio value offshore. Previously, the limit was 30% globally and an additional 10% exposure limit for investments in other African markets (outside of SA). These limits have been combined into one foreign prudential limit of 45% and the limit applies to all pension funds, insurance companies and investment funds.

SA portfolio classification updated
The Association for Savings and Investment South Africa (ASISA) Fund Classification for South African portfolios has been amended to accommodate this increase, as follows:

“South African Portfolios: These are collective investment portfolios that invest at least 55% of their assets in South African investment markets.”

This means that SA retirement fund members, who are able to choose their underlying investments based on the rules of the particular retirement fund, may now take advantage of the opportunity to invest a greater portion of their retirement fund investment(s) offshore.

Revisit portfolios
The industry has for many years advocated for an increase in offshore limits with respect to Regulation 28 portfolios and the change has been largely welcomed. We encourage investors to consult with their financial adviser to help them make informed decisions in relation to their investment objectives and ensure that their retirement investments meet their criteria accordingly. As a platform, we have implemented the offshore limit increases across our systems, including the PPS Investments Secure Site.

[1] All other assets not referred to in Table 1 of Regulation 28, and excluding hedge funds, private equity and crypto assets.

Quick Polls


We have watched with interest as each of the country’s large life insurers report their 2021 life claims statistics, with soaring claims and claims values. That got us thinking: how do the big life insurers compare against one another, from an IFA perspective?


An insurer is an insurer is an insurer
All are excellent: would not deal with them otherwise
There is one insurance brand that stands out for me
Tied agent: but my brand is the best out there
fanews magazine
FAnews June 2022 Get the latest issue of FAnews

This month's headlines

A free smoothie does not make a loyal customer
Consequential loss policy court cases
Everything you need to know about death, disability and severe illness cover post-emigration
Are advisers doing all they can for clients’ portfolios?
Financial advisers need help - navigating the complex ESG fund environment
Subscribe now