Time is ripe to put pension savings into infrastructure
But the proposed changes to regulation 28 are not enough on their own to bridge the investment gap
Draft amendments to regulation 28 of the Pension Funds Act, published by the Treasury last month, will allow retirement funds to invest up to 45% of their assets in infrastructure, opening up a huge potential source of funding for domestic infrastructure projects. But will this help bridge the infrastructure gap, as Treasury hopes?
SA retirement funds are subject to quantitative investment limits, aimed at promoting diversification and limiting the risk of bubbles emerging from too many assets chasing too few opportunities. Though these limits are generous for “mainstream” asset classes (for example, funds may invest up to 75% of their assets in equities or in non-governmental debt instruments), “alternative assets” get short shrift. Funds may invest no more than 15% in private equity, hedge funds and “other assets” combined...
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