In NAPTOSA’s statement on the Budget Vote Speech 2021 (National News Flash 10 of 2021) members were assured that the proposed amendments to Regulation 28 of the Pension Funds Act, 1956, would be studied to ensure that GEPF funds are adequately protected.
The proposed amendments have been published by National Treasury for comment and are informed by calls for increased investment in infrastructure, still within the overall aim of Regulation 28, namely to inter alia protect members’ pension savings by limiting the extent to which retirement funds may invest in a particular asset or in particular asset classes.
It is important for members of NAPTOSA who work in the public service to note that they are covered by the Government Employees Pension Law,1996, which is an Act divorced from the Pension Funds Act. The proposed amendments to Regulation 28 therefore have no direct bearing on members of the Government Employees Pension Fund (GEPF), although it could be expected that the GEPF and its investment organisation, the Public Investment Corporation (PIC), will note the proposed amendments for their own investment purposes.
When amendments to Regulation 28 was initially mooted, there was fear that pension funds would be forced to invest a percentage of their assets in infrastructure projects to be prescribed by Government (so-called prescribed assets). With the GEPF’s link to the public service, there was a real possibility that prescribed assets would inevitably also be extended to the GEPF.
A reading of the proposed amendments to Regulation 28 fortunately allays these fears. None of the proposed amendments touch on prescribed assets. In fact, a new insertion is proposed that requires the boards of trustees of retirement funds to pay attention to due diligence in all investments, including infrastructure investments, by ensuring that they take into account factors that could affect the sustainable long-term performance of an asset, before making an investment
All our members, whether belonging to the GEPF or a private pension fund, can therefore rest assured that no Government enforced investment of their pension moneys are envisaged with the proposed amendments to Regulation 28, or the extension thereof to the GEPF.