Are you ready to… retire?

By Adriaan Pask, Chief Investment Officer at PSG Wealth

National Treasury acknowledges that about 94% of all South African retirees will not have adequate resources to sustain themselves financially in retirement. So, what can you do to be part of the 6% that can retire comfortably? A good step in the right direction is to ensure you are invested appropriately to help you achieve your goals.

Saving enough for retirement can be challenging

The global retirement shortfall is expanding by the day, and the numbers are mind boggling. According to the World Economic Forum (WEF) the retirement shortfall gap in 2015 amounted to US$70 trillion, in line with the global GDP. This shortfall increased to around US$80 trillion by the end of 2018. If the trend of poor savings continues, this number is projected to grow to US$400 trillion by 2050 (or about five times the size of the global economy today).

The impact of ageing populations on the pension gap

Asset class limits prescribed by Regulation 28 .

Source: WEF

Recently, experts advised American millennials to save 40% of their income for retirement – a much higher percentage than the 15% people were advised to save a few years ago. However, saving close to half of your salary is, in most cases, not viable. Many have a set pension plan or retirement annuity through their employer, but even that may not be sufficient. We face macro- and socio-economic headwinds that weigh on retirement investments, such as inflation, a slowing economy, increasing longevity, and industry and regulatory shortcomings.

When it comes to retirement savings, it makes sense to ensure your money is appropriately invested to ensure for long-term growth. Other than putting away as much as you possibly can for retirement, the next most important decision an investor can make is on how that money should be invested. Here the split between the various asset classes is crucial.  When your objective is long-term growth, typically we would expect a higher asset allocation to growth assets like equities (shares), for example.

Regulatory constraints need to be considered

Regulation 28 of the Pension Funds Act (Reg 28) prescribes how money in retirement funds can be invested. The Act limits the allocation to certain types or categories of assets. For example, funds are not allowed to invest more than 75% in equities. While the regulation is intended to help protect investors from taking on too much risk, there are concerns that for some investors, it may limit the level of growth they are able to achieve from their assets, which could in turn impact their ability to achieve their goals.

Asset class limits prescribed by Regulation 28


Asset class

Maximum allocation (%)





Immovable property


Offshore assets




Hedge funds


Private equity funds


Debt instruments issued by or guaranteed by the Republic


Debt instruments from banks


*30% excludes investment in Africa. 40% is the limit including investment in Africa. This limit is prescribed by the SA Reserve Bank from time to time. This is a summary of the limits specified in Regulation 28 of the Pension Funds Act produced by the PSG Wealth research team.

Funds designed to optimise the limits of Regulation 28 can help investors achieve their goals

Investors who want to maximise growth within their portfolios while still meeting the requirements of Regulation 28 of the Pension Funds Act, can consider investment solutions designed specifically with this objective in mind. 

There are many factors to consider in planning for a comfortable retirement. Ensuring your assets grow as much as possible is one crucial part of this puzzle. Discussing your retirement plans and investment needs with a qualified financial adviser is a crucial first step in ensuring you are positioned to achieve your goals.

This post and content is sponsored, written and provided by PSG Wealth.

PSG Multi-Management is a licensed financial services provider, FSP 44306. For more information, visit

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