Regulatory Alerts2018-03-31
Information Circular No. 3 of 2018: Regulation 28 Increased Foreign Portfolio Investment Limits
The South African Financial Services Board issued this circular to update retirement funds on increased foreign portfolio investment limits under Regulation 28 of the Pension Funds Act. Pursuant to the South African Reserve Bank’s Exchange Control Circular No. 7/2018, funds may now allocate up to 30 percent of their assets to foreign investments, plus an additional 10 percent specifically for African markets. This regulatory amendment raises the previous aggregate foreign exposure cap, allowing South African retirement schemes to pursue broader international diversification.
Board Members: AM Sithole (Chairperson) H Wilton (Deputy Chairperson) Z Bassa JV Mogadime Prof PJ Sutherland FE Groepe D Turpin HMH Ratshefola D Msomi I Momoniat Executive Officer: DP Tshidi Riverwalk Office Park Block B 41 Matroosberg Road Ashlea Gardens Extension 6 Pretoria South Africa 0081 PO Box 35655 Menlo Park Pretoria South Africa 0102 Tel +27 12 428 8000 Fax +27 12 346 6941 E-mail info@fsb.co.za Toll free 0800 110443/0800 202087 Website: www.fsb.co.za ENQUIRIES: Alta Marais D. DIALLING NO.: 012 428 8065 OUR REF: 12/12/25 FAX: DATE: 23 February 2018 E-MAIL: Alta.Marais@fsb.co.za INFORMATION CIRCULAR PF NO. 3 OF 2018 PENSION FUNDS ACT, 1956 REGULATION 28: INCREASED FOREIGN PORTFOLIO INVESTMENT LIMITS On 21 February 2018, following the 2018 Budget announcement by the Minister of Finance, the South African Reserve Bank (“SARB”) has issued Exchange Control Circular No. 7/2018, indicating that the foreign investment limits have been revised upward. Regulation 28(3)(i) states that the aggregate exposure to foreign assets must not exceed the maximum allowable amount that a fund may invest in foreign assets as determined by the SARB, or such other amount as may be prescribed. Based on the SARB’s Exchange Control Circular No. 7/2018, retirement funds may therefore now acquire foreign exposure up to the revised limit of 30% in respect of foreign portfolio investments, and an additional 10% in respect of foreign portfolio investments in Africa. OLANO MAKHUBELA DEPUTY REGISTRAR OF PENSION FUNDS