In a world where time is often taken for granted and decimals in investment returns dominate the conversation, it’s easy to forget that pensions are actually about people’s futures. That’s why the real story of investing is how capital becomes a bridge between today’s choices and tomorrow’s environmental, social and governance impact. Pension funds exist to close the gap between what people have today and what they’ll need tomorrow. And in South Africa, those decisions don’t happen in a vacuum – they are guided by the Regulation 28 framework.
Regulation 28 stems from the South African Pension Funds Act and, although it might initially evoke thoughts of dry legal text, it serves as a safeguard for investors by setting clear investment limits on asset class exposures. These limits promote diversification and aim to reduce the risk associated with over-concentration in a single asset class. Over time, these guardrails have widened, with the most pertinent limits currently being:
- Total equities: Up to 75%
- Property: Up to 25%
- Hedge funds: Up to 10%
- Private equity: Up to 15%
- Debt instruments: Up to 100% can be invested in debt instruments issued by or guaranteed by the South African government; otherwise, the limit for debt assets is up to 75%.
- Alternative investments: Up to 15%
- Infrastructure: Up to 45%
These limits are not handcuffs – they are guardrails, ensuring that retirement portfolios remain balanced and resilient. As Warren Buffett famously put it: “Do not put all your eggs in one basket.” Regulation 28 is that principle, codified to protect futures.
Globally, this emphasis on balance has never been more relevant. Pension funds around the world are tilting a larger proportion of their investments towards private markets in search of yield, resilience, and diversification. A Financial Times study noted that several large US pension funds plan to expand allocations to private credit in 2025 and 2026, reflecting a growing recognition that traditional bonds and equities alone are no longer sufficient to deliver stable, inflation-beating returns. Alternatives such as private credit and infrastructure have become not just attractive, but essential.
Private credit, in particular, has emerged as one of the fastest growing avenues for South African investors to work within Regulation 28 while still capturing yield and diversification. Listed notes, traded on regulated markets, offer liquidity, transparency, and ease of compliance. Unlisted notes, by contrast, are less liquid but provide yield premiums and direct exposure to niche sectors such as renewable energy, SMEs, and project finance. Within the 15% alternative allocation, these instruments give pension funds access to return streams that equities and government bonds simply cannot provide. Therefore, private credit allows investors to unlock value beyond the mainstream markets – and invest in the parts of the economy where growth and social impact can be unlocked.
But diversification today is not only financial; it is increasingly transformational. South Africa’s realities are stark: insufficient transmission capacity, load curtailment, underfunded transport systems, and ongoing water supply challenges. According to the Africa Finance Corporation, the infrastructure funding gap across Africa exceeds US$400 billion annually. For decades, governments carried the responsibility of fixing these problems alone. Now, Regulation 28 signals that the private sector – including pension savings – can and should play a role in filling the void.
For investors, infrastructure when done right, offers long term, inflation linked returns with the kind of stability pension funds crave. For society, it means lights that stay on, taps that don’t run dry, and internet that connects classrooms in villages. We believe that when pension money builds power plants, it doesn’t just earn interest — it earns trust.
This is the essence of the great diversification: moving beyond traditional allocations, beyond short term returns, and into investments that deliver both stability and impact. Regulation 28 ensures that retirement savings are safeguarded, but it also enables innovation, pointing the way toward alternatives like private credit and infrastructure. Circling back, we often assume there will always be more time to save, more time to plan, more time to prepare for retirement. But time is finite, and the need is urgent. The decisions we make today – about how and where we invest – will determine not just financial outcomes, but the quality of futures. Diversification matters: because where financial returns meet transformational impact, retirement is secured, dignity is preserved, and time – our most precious resource – is no longer taken for granted.