Treasury has published tweaks to proposed legislation that will allow retirement funds to invest 45% of the money they manage in South African infrastructure.
Earlier this year, Treasury announced that Regulation 28 of the Pension Funds Act will be changed to allow retirement funds to invest in bridges, roads, cellphone towers and other infrastructure. Importantly, this is optional: retirement funds don’t have to invest in infrastructure.
But the proposal will allow retirement funds investments of 45% in South African infrastructure, with an additional 10% in African infrastructure outside of South Africa - bringing the total maximum infrastructure exposure to 55%.
Following comments from stakeholders, Treasury announced changes to the proposed regulations on Tuesday.
This includes changing the definition of "infrastructure". Previously, this was defined as installations, structures, facilities, systems, services, or processes, as set out in the Infrastructure Development Act. Also, the pension regulation required that the infrastructure must be part of the national infrastructure plan, which excludes private sector infrastructure and infrastructure in the rest of Africa or abroad, Treasury said.
The definition has been revised to be "any asset class that entails physical assets constructed for the provision of social and economic utilities or benefit for the public".
"The 'social' aspect of the definition will accommodate impact investing by retirement funds. Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return," Treasury said in a statement.
While the original legislation also required retirement funds to provide reports on all their infrastructure investments, the new changes make it easier: reports are only required for the 20 biggest projects.
The new changes also introduce a new restriction on investments in crypto assets, "because they are seen to be of very high risk", Treasury said.
A two-week public comment period has been announced for the new amendments.
