What is Regulation 28 in South Africa?
What is Regulation 28 in South Africa?
All retirement annuities, provident funds, and pension funds are governed by Regulation 28 of the Pension Funds Act, which, amongst other things, stipulates that one’s respective investment can only have a maximum offshore exposure of 30%, with an additional 10% for Africa (which nobody really used in the past, in any …
Does Regulation 28 apply to living annuities?
Living annuity investors are currently not subject to Regulation 28 of the Pension Funds Act, which mean that there are no prescribed investment limitations as in the case of a Retirement Annuity investment.
Which regulations covers where pension funds in South Africa are allowed to invest by prescribing limits for various assets types and classes?
What is Regulation 28? Regulation 28 of the Pension Funds Act sets limits to where people should invest their retirement savings. It makes sure that you invest in different assets or types of assets so that you don’t take unnecessary investment risks.
Does a pension count as an investment?
Pensions are long-term investments. You can’t usually touch the money in your pension pot until the age of 55 at the earliest, and you might not need the money until much later when you stop working.
What does regulation 28 to the Pension Funds Act deal with?
Regulation 28 aims to mitigate concentration risk to member savings and ensures protection by limiting the extent to which retirement funds may invest in a particular asset or in particular asset classes.
Who does regulation 28 apply to?
Regulation 28 applies to pension, provident and retirement annuity funds, and essentially limits asset managers’ allocations of retirements savings to certain assets classes, including equities, property, and foreign assets.
What is the best RA in South Africa?
Retirement annuity comparison for a lump sum investment
|Most popular Reg 28 (balanced) passive fund||Nedgroup Investments Core Diversified Fund||Satrix Balanced Index Fund|
|Total Investment cost of above fund (incl VAT)||0.42% p.a.||0.33% p.a.|
What does Regulation 28 to the Pension Funds Act deal with?
When did Regulation 28 start?
In February 2011, the then-finance minister Pravin Gordhan, announced changes to Regulation 28 to apply at member level. Since April 2011, all new retirement investments must adhere to Regulation 28 per individual member of any retirement fund.
How are pension funds invested?
Until relatively recently, pensions funds invested primarily in stocks and bonds, often using a liability-matching strategy. Today, they increasingly invest in a variety of asset classes including private equity, real estate, infrastructure, and securities like gold that can hedge inflation.
Is it better to invest in pension or ISA?
The main differences between pensions and ISAs is tax relief and when funds can be drawn. Tax relief is only available on pensions (not ISAs) and is an important boost to your retirement savings from the government.
What is a Regulation 28 compliant fund?
Regulation 28 is part of the Pension Funds Act and its purpose is to protect investors against poorly diversified investment portfolios, and ostensibly aims to ensure that investors’ hard-earned money is invested in a sensible way without too much exposure to risky assets.
What does Reg 28 mean for Your Retirement Funds?
Regulation 28 applies to pension, provident and retirement annuity funds, and essentially limits asset managers’ allocations of retirements savings to certain assets classes, including equities, property, and foreign assets. As it currently stands, the regulation currently limits equity exposure in retirement funds to 75% whether local or offshore.
How many submissions were received for the regulation 28 amendments?
The National Treasury today publishes the second draft amendments to Regulation 28 of the Pension Funds Act for a two-week public comment period. The first draft was published in February 2021. Thirty-nine (39) submissions were received via the public comment process. Most submissions welcomed the proposed amendment of the regulation.
How will regulation 28 affect my pension?
Before determining that Regulation 28 alone can detrimentally affect your pension, keep in mind that there are other factors that can negatively impact on your investment. Specifically, investment f ees and investor behaviour can both impact investment outcomes if not managed carefully.
Does regulation 28 protect long-term investors from high – risk investments?
While proponents of Regulation 28 believe that this piece of legislation is effective in protecting pension fund money from high – risk investments, critics believe that it is unfair to expect long-term investors to dilute their potential returns.