Retirement · South Africa
How does Regulation 28 affect retirement savings?
Regulation 28 sets investment boundaries for South African retirement funds, including limits on asset classes and exposure to issuers. The major ceilings include 75% equities and 25% property; the current institutional foreign-investment limit is 45%. These limits overlap. Compliance does not identify the right allocation for you, guarantee your capital or establish whether you have saved enough to retire.
In this article
Establish which money is subject to the rule
A retirement annuity, pension or provident fund, and preservation fund operate within retirement-fund rules. An ordinary investment account outside such a fund is a different arrangement. Owning both does not turn the retirement fund's limits into limits on every asset the household owns.
Where a fund offers individual member choice, Regulation 28 also addresses the assets associated with that member's choice. It is not generally enough that the fund as a whole complies while a chosen member portfolio does not. There is a specific legacy exception for qualifying arrangements entered into before 1 April 2011, with changes that can end the exception. Establish the applicable terms with the fund rather than treating an old account as permanently exempt. See the consolidated regulation, paragraphs 3(b) and 3(c).
The fund's investment options and platform rules may be narrower than the legal envelope. Permission under legislation does not oblige a provider to offer an asset. Equally, an investment appearing on a general platform menu does not establish that it is available in a retirement account.
For the different question of where to save, see retirement annuity versus tax-free savings account. Regulation 28 is one part of that comparison, alongside tax, access and the purpose of the money.
The limits are several tests, not slices of one pie
The final 2022 amendments, effective 3 January 2023, include the following boundaries. This is a selective explanation, not the complete compliance schedule.
| Exposure | Selected ceiling or rule | What the headline number leaves out |
|---|---|---|
| Equities | 75% overall | Foreign shares also count toward foreign exposure; issuer and other sublimits remain relevant |
| Property | 25% overall | Classification and issuer limits still matter |
| Private equity | 15% | Further aggregate limits apply; the ceiling is not a required allocation |
| Hedge funds | 10% | Other conditions and combined limits remain relevant |
| Direct infrastructure across asset categories | 45%, with the specified SA government-debt exclusion | This is an additional test across holdings, not an extra asset bucket |
| One issuer or entity across asset categories | 25%, excluding specified debt or loans issued by, to or guaranteed by the Republic | A lower applicable category or issuer limit can still bind |
| Crypto-assets | Prohibited for the fund | A provider's regulatory status does not create permission for the fund to invest |
Separately, the SARB's institutional-investor guidance states the 45% foreign limit against retail assets under management. Regulation 28 refers to the allowable foreign amount determined by the SARB. It is not a 45% personal allowance for a South African's entire wealth, and it is not 45% plus an additional allocation elsewhere in Africa.
Do not add 75% equities, 45% foreign and 45% infrastructure and infer that the fund can invest 165%. A holding can appear in several tests at once. Its rand value is counted once in the portfolio total, but its characteristics may be relevant to multiple ceilings.
A R2 million example: one ceiling passes, another fails
Assume the following invented, simplified allocation. The descriptions represent underlying exposures, rather than fund names. No derivatives, leverage, infrastructure or other holdings are included.
| Underlying exposure | Starting value | Starting weight | After moving R200,000 from local bonds to foreign bonds |
|---|---|---|---|
| Foreign equities | R800,000 | 40% | 40% |
| Local equities | R700,000 | 35% | 35% |
| Local bonds | R500,000 | 25% | 15% |
| Foreign bonds | R0 | 0% | 10% |
| Total | R2,000,000 | 100% | 100% |
Initially, equities total 75% and foreign exposure totals 40%. The proposed move leaves equities at 75%, but increases foreign exposure to 50%. Passing the equity test has not made the move compliant with the foreign ceiling.
The original allocation has R100,000 of headroom against that foreign ceiling at the stated valuation: 45% of R2 million is R900,000, compared with R800,000 already foreign. That is arithmetic headroom against one limit, not permission to invest R100,000 in a particular asset. Other restrictions can bind first, and market movements can change the result.
The same issue arises within an issuer. R300,000 on deposit with one bank plus R300,000 in debt issued by that same entity is R600,000, or 30% of this R2 million portfolio. Changing the asset label has not separated the issuer exposure. The 25% aggregate rule matters even before examining any lower applicable limit. Debt covered by the regulation's Republic guarantee exception requires its own classification; a bank name alone does not establish that exception.
Read through the wrapper, then read the mandate
A fund label is not a complete exposure report. For ordinary pooled holdings, underlying assets matter; the regulation also contains specific look-through and disclosure provisions and exceptions. Its foreign-exposure requirements are not avoided simply by buying a rand-denominated holding. SARB pension reporting notes likewise distinguish the underlying asset exposure from the currency used to subscribe.
Obtain a current compliance or exposure report from the fund or administrator rather than reconstructing a legal certificate from marketing fact sheets. Reports can use different dates, category definitions and levels of detail. A number without its denominator and classification may answer a different question from the one you intended.
Two compliant balanced funds can also hold many of the same securities. Combining them does not necessarily add much diversification. Conversely, each can comply while taking materially different equity, credit or liquidity risks. A legal maximum says little about where a particular manager operates within it.
This is why the fund's mandate, actual holdings and household purpose need to be read together. Compliance is an essential constraint, but it cannot supply a missing spending reserve or remove exposure that the household already has through its employer or business. Household concentration addresses that wider picture.
A breach caused by prices is not the same as an authorised trade
Relative price movements can push a previously compliant exposure over a ceiling. Paragraph 3(j) makes provision for specified non-discretionary breaches, with notification, restrictions on adding exposure and a period for restoring compliance. It does not give members an unrestricted right to trade beyond a limit or ignore a notice for a year. Ask the administrator what caused the breach, which rule applies, what action is required and by when. Product processes may be more restrictive.
Nor does a higher infrastructure ceiling require a fund to invest up to it. National Treasury's explanation of the final amendments leaves investment decisions with fund trustees. A permitted asset still needs an investment case; illiquidity, valuation and credit risks do not disappear because capacity exists under a rule.
Ask for the constraint that actually binds
The exposure table above shows the two-ceiling example. For a real proposed change, ask the administrator to identify the relevant member arrangement, valuation date, underlying classification, limit before and after, any additional restriction, and the report supporting the conclusion.
Then separate two decisions: whether the fund may implement the change, and whether it makes sense for the household. The first can fail even when the asset looks attractive. The second can fail even when the first passes.
ClearGauge's judgement: “Regulation 28 compliant” is the start of a portfolio conversation, not its conclusion. The useful explanation names the binding constraint and then shows how the available choices relate to the money's actual job. How much offshore exposure is needed is a separate household question, not a reason to treat a regulatory ceiling as a target.
Rules and source scope checked 6 September 2026. The selected limits are not an exhaustive legal schedule; exemptions, classification and fund terms require verification for the actual arrangement. Examples ignore dealing costs and market movements and do not certify compliance or suitability. General financial information, not a recommendation to buy, sell or change a retirement allocation.