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Pension Funds Act, 1956 (Act No 24 of 1956)

Regulations

Part VII : General

28. Asset spreading requirements

(2) Principles

 

(a) A fund must at all times comply with the limits as set out in this regulation;
(b) A fund must have an investment policy statement, which must be reviewed at least annually.
(c) A fund and its board must at all times apply the following principles:—
(i) promote the education of the board with respect to pension fund investment, governance and other related matters;
(ii) monitor compliance with this regulation by its advisors and service providers;
(iii) in contracting services to the fund or its board, consider the need to promote broad-based black economic empowerment of those providing services;
(iv) ensure that the fund's assets are appropriate for its liabilities;
(v) before making a contractual commitment to invest in a third party managed asset or investing in an asset, perform reasonable due diligence taking into account risks relevant to the investment including, but not limited to, credit, market and liquidity risks, as well as operational risk for assets not listed on an exchange;
(vi) in addition to (v), before making a contractual commitment to invest in a third party managed foreign asset or investing in a foreign asset, perform reasonable due diligence taking into account risks relevant to a foreign asset including but not limited to currency and country risks;
(vii) in performing the due diligence referred to in (v) and (vi), a fund may take credit ratings into account, but such credit ratings should not be relied on in isolation for risk assessment or analysis of an asset, should not be to the exclusion of a fund's own due diligence, and the use of such credit ratings shall in no way relieve a fund of its obligation to comply with all the principles set out in paragraph 2(c);
(viii) understand the changing risk profile of assets of the fund over time, taking into account comprehensive risk analysis, including but not limited to credit, market, liquidity and operational risk, and currency, geographic and sovereign risk of foreign assets; and
(ix) before making an investment in and while invested in an asset consider any factor which may materially affect the sustainable long term performance of the asset including, but not limited to, those of an environmental, social and governance character.
(d) With the appointment of third parties to perform functions which are required to be performed in order to comply with the principles in (c) above, the fund retains the responsibility for compliance with such principles.