Pension funds in South Africa are being asked a harder question than whether they follow the rules: are members actually better off? In recent days, the finance minister, retirement-industry leaders, and the country's largest pension fund have each addressed a different part of that question.
The issues are connected. How funds invest decides how much money members build up. How the system is regulated decides whether workers are protected. And how well funds keep records decides whether the money reaches the people it belongs to at all.
There is also a deadline. Public comment on National Treasury's plan to centralise South Africa's unclaimed financial assets, including unclaimed pension benefits, closes today. Here is what is changing, and what it means for your retirement savings.
How do pension funds work?
A pension fund pools monthly contributions from members, and usually their employers, and invests that money on their behalf. The fund pays out when a member retires, resigns, divorces or dies.
There are two broad designs. In a defined contribution fund, your benefit depends on what went in and how the investments performed. In a defined benefit fund, the payout follows a formula.
The Government Employees Pension Fund (GEPF) is the best-known defined benefit fund in South Africa. It says what matters for a member's payout is years of service and final salary at exit. The GEPF is a separate legal entity from government, established in 1996.
That design explains why market falls do not directly cut a GEPF pension. IOL reported that the fund moved to reassure members after a R200bn drop in market value linked to the Middle East conflict, saying their benefits remained secure.
Because they invest such large pools of long-term capital, retirement funds are among the most important investors in South Africa's shares, bonds and, increasingly, infrastructure. Their choices affect the wider economy, not only members' statements.
The two-pot system: how retirement savings are now split
Since 1 September 2024, contributions to most occupational retirement funds have been split into three components. A vested component holds savings built up before that date and stays subject to the fund's earlier rules. Of every contribution made after that date, one-third funds a savings component that members can dip into before retirement, and two-thirds funds a retirement component that stays locked until retirement and must then be used to buy an annuity.
To start the new savings component, funds made a once-off transfer from each member's existing vested savings, capped at 10% of the balance or R30,000, whichever is lower. Members may then make one further withdrawal from the savings component per tax year, subject to a R2,000 minimum, taxed at their marginal income tax rate.
Uptake has been heavy. Alexforbes alone has processed more than a million savings-component claims since the system launched, and its figures show most members who withdraw keep coming back: 67% of those who claimed in the 2025 tax year claimed again in 2026. Some members have also been caught out at tax-return time, since the marginal-rate withholding on a withdrawal does not always match what is finally owed.
Pension fund investment: why the old playbook is under pressure
For about four decades, retirement funds benefited from falling inflation, declining bond yields and cheap capital. At the Institute of Retirement Funds Africa (IRFA) 2026 conference, Momentum Systematics chief investment officer Mario Fisher argued that those conditions have gone, as reported by Daily Maverick.
Fisher pointed to geopolitics, fiscal deficits, duplicated supply chains and energy-transition spending as drivers of higher structural inflation and volatile interest rates. In that world, he said, a traditional mix of shares and bonds no longer diversifies risk automatically. "We are experiencing a regime change at the moment," he told delegates.
Artificial intelligence adds another layer. Gaia Capital executive chairman Mich Nieuwoudt cautioned that pension funds must plan over 10 to 30 years, while the long-term economics of AI remain unproven. His view is that uncertainty of that kind should demand a higher risk premium before members' money is committed.
What Regulation 28 means for retirement savings
Regulation 28 of the Pension Funds Act caps how much a fund can place in any one type of asset or any single company. Its purpose is to stop members' savings becoming too concentrated in risky or illiquid investments.
Amendments that took effect in January 2023 made the following changes:
• Infrastructure: funds may hold up to 45% of assets in infrastructure, excluding government-guaranteed debt.
• Private equity: the limit rose from 10% to 15%, separate from a 10% hedge-fund limit.
• Single entity: exposure to any one company is capped at 25% across asset classes.
• Crypto: investment in crypto assets remains prohibited.
The 45% figure is a ceiling, not a target. Treasury has stressed that each fund's trustees still decide the investment policy.
In practice, take-up has been slow. According to Daily Maverick's IRFA reporting, actual infrastructure allocations remain in the low single digits. Nieuwoudt attributes this to institutional inertia and gaps in trustee and consultant expertise. He contrasts South Africa with Chile, where he says local pension funds own roughly half of domestic infrastructure.
From compliance to outcomes: what regulators now expect
Finance Minister Enoch Godongwana used a keynote at the Financial Sector Conduct Authority (FSCA) conference in Cape Town to stress the role pension funds play in ordinary South Africans' financial stability, Channel Africa reported. The event was co-hosted with the International Organisation of Pension Supervisors and focused on member experience.
Citing the IMF's July 2026 outlook, Godongwana pointed to geopolitical tension, trade fragmentation, renewed inflation pressure and market volatility. His policy message was about coverage. He called for retirement systems "that follow the worker, rather than simply the job", making it easier for self-employed, informal and other non-standard workers to keep saving.
The industry is moving in the same direction. IRFA chairperson Nancy Andrews told the conference that trustees can no longer judge governance by procedural compliance alone; the real measure is members' purchasing power after retirement.
The regulator is formalising that shift. The FSCA's head of retirement-fund supervision, Zareena Camroodien, said the authority is developing a value-for-money framework for retirement funds, drawing on Australian and UK models. It sits alongside unclaimed benefits as one of the FSCA's two main retirement priorities.
Outcomes can also fail before money is invested. In July, Godongwana said more than R1.7bn deducted from municipal workers' salaries for pension contributions had not been paid over to their funds.
Unclaimed pension benefits: the money that never reaches members
The clearest failure of member outcomes is money that is owed but never paid. The FSCA estimated South Africa's unclaimed financial assets at about R88.6bn in 2022, with unclaimed retirement benefits making up roughly 53%. That estimate has not been updated since.
Why pension benefits remain unpaid
The GEPF classifies a benefit as unclaimed when the member's reason for leaving and last day of service are known, but nothing has been paid within 24 months, according to IOL. The fund lists four main causes of GEPF unclaimed benefits:
• Exit paperwork: the Z102 exit forms were never submitted, or contain errors that were not fixed.
• Banking problems: payments bounced back because of wrong details or a dormant or frozen account.
• Missing information: the fund lacks details about a deceased member, a spouse or other beneficiaries.
• Tax issues: SARS declined the tax directive because the member's tax affairs were not in order.
The GEPF says it has started informing members directly about unclaimed benefits and how they can help resolve them. Across the wider industry, the causes also include incomplete historical records, frequent job changes and the legacy of migrant labour.
Treasury's plan for a central administrator for unclaimed assets
In August, National Treasury published a discussion paper proposing a central administrator for unclaimed assets. The administrator would handle record-keeping and tracing, while the money itself would be deposited with the Corporation for Public Deposits (CPD), a Reserve Bank subsidiary. According to SAnews, the reforms would start with unclaimed retirement benefits before extending to other sectors.
The most significant idea for members is a possible time limit on claims. The paper floats two options: a cut-off once the owner would have turned 110, or 45 years after the benefit first became unclaimed. Today, there is no such limit, and an owner can claim at any time. Treasury has said it has not yet taken a position on either option.
The industry broadly welcomes central record-keeping but has raised concerns about the CPD. Commentators quoted by The Citizen warned that retirement money moved there may lose protections it enjoys under retirement-fund law, and that a conservative cash-based mandate suits bank deposits better than long-term savings.
Meanwhile, the FSCA has asked funds and administrators holding about 86% of unclaimed retirement benefits to submit claims data for 2020 to 2025. That data will help Treasury design the administrator.
How to check for unclaimed pension money
Whatever Treasury decides, members can protect themselves now:
• Search first: use the FSCA unclaimed benefits search on the regulator's website. It returns the fund's contact details, and the claim is then made directly with that fund.
• Keep details current: update your contact details, banking details and beneficiary nominations with every fund you belong to, especially when changing jobs.
• GEPF members: confirm your Z102 exit forms were submitted correctly and that your SARS tax affairs are in order.
• Avoid paid middlemen: the Government Employees Pension Ombud has warned members not to pay agents to lodge complaints on their behalf.
What remains uncertain for pension funds in South Africa
Several questions are still open. Treasury has not chosen a claims cut-off, or confirmed it will adopt one. It has not said exactly what would happen to money that passes a cut-off, and the claims process will only be finalised once the administrator exists. The FSCA's value-for-money framework is also still in development.
The direction, however, is clear. Pension funds in South Africa will increasingly be judged by what members actually receive: sound long-term returns, fair costs and benefits that reach the right person. For members, the most useful step today is simple: know which funds hold your money, and make sure they can find you.
