Offshore limit is a ceiling, not a target: how SA can keep savings working at home

When National Treasury lifted the offshore limit for retirement funds from 30% to 45% in 2022, the intent was sound. Four years on, the Finance Minister has hinted more than once that he regrets it. The question now is whether a rollback is coming, and whether it should.

We are not aware of any formal proposal. Treasury has said it is evaluating the impact, not committing to a reversal. A rollback would be difficult. Funds would face messy repatriation or grandfathering provisions, South Africa’s reputation for predictable capital rules would suffer, and the jury is out on what a reversal would do to future flows.

That does not mean the change came without cost. Our CEO, Hendrik du Toit, has publicly argued that the speed of the 2022 liberalisation had unintended consequences for the local industry. The shift from 30% to 45% encouraged a sell-down of domestic assets, which thinned JSE liquidity and weighed on valuations, particularly in the small- and mid-cap space. Navigare Labs¹ found that local managers were net sellers in 12 of the first 15 months after the change, to the tune of roughly R190 billion.

Our concern was the pace of the change, and the lack of a matching domestic investment case.

Build the investment case, don’t force the flows

If we want more private savings invested at home, the supply side matters most. Capital follows investable opportunity. The shortage is not of money. It is of projects structured well enough to fund. Five things would help:

• A bankable infrastructure pipeline, with blended finance and credit enhancement. Government plans to spend more than R1 trillion on public infrastructure over the next three years², and Operation Vulindlela has moved from policy to delivery. Where projects are well structured, capital arrives. Our SA Infrastructure Credit Fund has grown to more than R3 billion in three years, with more than 80% invested in South African projects³.
• Financially sustainable energy, logistics and water utilities. Investors will fund a solar plant if the grid can take its power and the buyer can pay for it. Utility-style models for municipal water and electricity, and a transmission company with a clear revenue model, turn policy into investable assets.
• Deeper local capital markets, including municipal and SOE bonds. Unfortunately, the public market is getting thinner. Net corporate issuance is sharply negative on the back of weaker growth and a wave of redemptions. Eskom’s R38 billion ES26 bond, for example, was not refinanced in the public market⁴.
• Creative product solutions. South Africa’s REIT regime built a R350 billion⁵ market through tax transparency and sound regulation. Extending it to data centres, renewable energy leases and telecom towers could give pension funds a familiar route into new-economy infrastructure. The US took the same path, widening what counts as eligible assets until its REIT market reached more than US$1.6 trillion⁶.
• Fiscal discipline and policy certainty. Long-term capital needs to know the rules will still apply when the project is built.

We would caution against prescribed assets. They undermine fiduciary duty and deter the very capital they are meant to attract.

Is 45% appropriate?

As a ceiling, yes. South Africa constitutes a small share of global markets, and diversification is prudent. But more offshore does not automatically mean more diversified. The US is close to two-thirds of the global index, and a handful of mega-cap technology stocks dominate it. Buying the index means a concentrated bet at elevated valuations, plus rand-dollar currency risk. Real diversification takes active judgement about what is owned offshore, not just how much. Meanwhile, many South African companies are priced for South African risk rather than their earnings power, which creates opportunity for active managers.

There is also a transformation and development perspective. Every rand that moves to international managers is a rand that sits largely outside the B-BBEE and Financial Sector Code framework, and outside local commitments on ownership, skills development and employment. Many international firms have no meaningful South African footprint, make little social investment here, and do not employ locally or take part in the domestic capital market. They also generally do not pay tax here, so the fiscus loses revenue on the fees earned on South African savings.

The Minister himself has said the relaxation runs against the spirit of transformation and risks reversing the industry’s hard-won gains. South African managers have spent years building that record, with black and female portfolio managers now co-managing some of the country’s largest multi-asset funds. Offshore managers competing for the same mandates should be held to the same standard.

For a country with significant developmental needs, how and with whom savings are invested matters as much as how much stays onshore. Keep the ceiling, make the domestic case stronger, and be deliberate about who manages the money.

¹ Navigare Labs Fund Positioning April 2023
² 2025 Budget Speech, March 2025
³ Ninety One, 30 September 2026
⁴ Eskom media statement, April 2026
⁵ SA REITs, March 2026
⁶ National Association of Real Estate Investment Trusts Q1 2026