Page 34 - Waterfall City Issue 2 February 2025

Waterfall City Finance

“As part of defining your

holistic retirement plan,
you need to consider the
role of a share portfolio in

achieving your retirement
outcomes.”

• Across asset classes, as portfolios assets or types of assets to avoid inflation) know that shares continue
need to have exposure to shares, cash, unnecessary investment risks. to be the asset class capable of
unit trusts and bonds to ensure they delivering these returns over the long-
benefit from having exposure to all Regulation 28 applies to all retirement term. When considering Regulation
asset classes, and funds, including retirement annuities, 28 – an industrywide standard for
• Geographically so that they are pension, provident, and preservation delivering retirement-appropriate
relatively hedged when considering funds. Regulation 28 limits include that returns – shares remain the key asset
rand weakness. retirement fund members can only class (75% allocation) to deliver real
invest: returns as part of a holistic retirement
The retirement industry is well aware of • a maximum of 75% of their retirement plan. Speak to a financial adviser if you
the risks associated with investing and, savings in shares, believe your retirement plan is at risk
in particular, the need for investors’ • a maximum of 25% in property, and of not providing a sustainable income
retirement funding to be able to • a maximum of 45% in international to cover your financial needs in your
provide for the long-term. Regulation assets. retirement years.
28 of the Pension Funds Act has been
promulgated to address this risk. You can ask your financial adviser for
more details about the applicable
What is Regulation 28? limits. Compliance with these
Regulation 28, issued under the guidelines is closely monitored
Pension Funds Act, aims to protect by insurers who are Regulation
retirement fund members’ savings 28-compliant service providers, as
by limiting the extent to which they are required to report on this
retirement funds may invest in compliance regularly.
particular assets or asset classes. It
prevents excessive concentration risk Speak to an expert
(i.e. ‘not putting all your eggs in one Investors who understand the
basket’). It ensures that members of importance of achieving actual returns
retirement funds invest in different (after discounting the impact of

32 Waterfall City Issue 2 2025