The South African Reserve Bank recently announced some major changes to exchange control regulation. Many industry experts believe that as a result of this you could potentially invest 100% of your pension offshore.
At the moment, you can only invest up to 30% of your pension offshore. Even if you invest in a South African unit trust, if the unit trust invests in shares that are not listed in South Africa, then you can only invest up to 30% offshore, excluding the additional 10% available to invest in Africa.
However, the changes to exchange control regulation by the Reserve Bank suggest that anything listed on the Johannesburg Stock Exchange (Shares, Exchange Traded Funds, Notes, Debt Instruments) will be classified as domestic, even if it invests offshore.
As a result of this, some in the industry think that you might be able to invest your pension effectively offshore by investing in offshore products listed on the Johannesburg Stock Exchange.
At the moment, the Financial Services Conduct Authority (FSCA) has told everyone in the industry that this matter is under discussion and there is no decision yet about what might happen.
Our view is that whilst there may well be some flexibility coming in the future, it is unlikely that you will be able to invest 100% offshore once we get clarity. Nonetheless, the team will keep a close eye on this and we will definitely consider increasing the exposure to offshore instruments further if legislation allows.
OUTvest is an authorised FSP. All investments are exposed to risk, not guaranteed and dependent on the performance of the underlying assets.