Pension fund regulation changes to be gazetted

The National Treasury will gazette proposed changes to regulation 28 of the Pension Funds Act today for comment.

The changes are aimed at making it easier for the savings industry to invest in infrastructure.

The proposals do not introduce prescribed assets.

Speaking to MPs on parliament’s joint finance committees, Treasury deputy directorgeneral Ismail Momoniat said yesterday: “The gazette on regulation 28 asking for public comment will be published [on Friday], enabling [trustees] to invest in infrastructure.

“It doesn’t force them to, it just enables the trustees to do so at a higher level and through different ways.”

Regulation 28 sets the maximum level that pension funds and life insurers can hold in various asset classes, such as property, bonds, listed shares and unlisted assets to spread risk and protect savers.

But the regulation does not set a floor — or a mandatory level of investment in an asset class — for any asset class.

Asset prescription was done during apartheid as a means to raise money for the state.

The proposed change could introduce a specific infrastructure category of investment, which, at the moment, is done quite extensively through other asset categories.

Many pension funds already invest in infrastructure, either through the listed bonds of state-owned entities or directly in projects under the unlisted assets category.

It has also been proposed by the Association for Savings and Investment SA (Asisa) that specific project bonds be introduced.

Asisa statistics show that the domestic savings industry holds R202bn in government bonds.

The original proposal comes after an ANC conference resolution in 2017 committed the party to investigate changes to the regulation, following persistent and ongoing lobbying for prescribed assets from union federation Cosatu and many within the ANC.

While it may satisfy some in the ANC that the resolution has been put into effect, others are unlikely to find it an acceptable solution.