Increased foreign portfolio investment limits
18 Jul, 2022


The FSCA recently published Communication 8 of 2022, confirming the increase in the foreign portfolio investment limits as set out in Regulation 28 of the Pension Funds Act No.24 of 1956.

In this article we take a closer look at the impact thereof on retirement funds and their members.

Regulation 28

Section 36(1)(bB) of the Pension Funds Act provides that the Minister of Finance may make regulations limiting the amount and the extent to which a retirement fund may invest in particular assets or in particular kinds or categories of assets, prescribing the basis on which the limit shall be determined and defining the kinds or categories of assets to which the limit applies.

Currently, these limitations are set out in Regulation 28. The main purpose of Regulation 28 is to mitigate excessive concentration risk to member savings and to ensure protection by limiting the extent to which retirement funds may invest in a particular asset or in particular asset classes.

This is echoed in the preamble to Regulation 28 which clearly states that “a fund has a fiduciary duty to act in the best interest of its members whose benefits depend on the responsible management of fund assets… This duty supports the adoption of a responsible investment approach to deploying capital into markets that will earn adequate risk adjusted returns suitable for the fund’s specific member profile, liquidity needs and liabilities.”

The change

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 South African Reserve Bank (“SARB”), or such other amount as may be prescribed.

On 23 February 2022, following the 2022 Budget announcement by the Minister of Finance, the SARB issued Exchange Control Circular No. 10/2022, indicating that the foreign investment limits of 30 per cent and 40 per cent respectively – as well as the African allowance of 10 per cent – applicable to institutional investors (for example, retirement funds, long-term insurers and CIS managers) have been combined into a single limit of 45 per cent of total retail assets under management.

Consequently, on 18 March 2022, the FSCA published Communication 8 of 2022 which confirmed the increase in foreign investment limits as set out in the SARB Exchange Control Circular 10/2022.


The increased foreign investment limits came into effect on 23 February 2022, being the date of the publication of the SARB-issued Exchange Control Circular No.10/2022. While portfolio managers are likely to take advantage of this increased allowance, it is important for the boards of trustees of retirement funds to ensure that they revise their investment policies and mandates (where needed) to ensure that the overall investment strategy of the funds remains focussed on helping members reach their goals within the regulatory limits.


Glacier Financial Solutions (Pty) Ltd is a licensed financial services provider.

Sanlam Life is a Licensed Life Insurer, Financial Services and Registered Credit Provider (NCRCP43).


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