SOUTH AFRICA - Asset managers in South Africa have been given more flexibility to invest overseas, as the offshore allowance for pension funds was raised to 20% in the 2008 Budget.
Vivienne Taberer, portfolio manager at Investec Asset Management, said the move towards prudential requirements meant managers could now report changes of allocations on a quarterly basis, allowing the flows between the domestic and overseas market to happen more freely, as opposed to the previous situation of having to apply for offshore allowances.
The offshore allowance has been increased to 20% from 15% for pension funds.
"It allows asset managers more flexible asset allocation and more freedom, as previously it was not that easy to make a shorter term investment decision," said Taberer.
Patrick Mamathuba, chief investment officer, STANLIB, said, in the short term, it could mean a lot of money would flow out of South Africa, but it had happened at a time when the Rand was weaker which meant it should end positively. "It shows the country is ready to play on an equal footing with the rest of the world," he said.
Craig Aitchison, head of Old Mutual Consultants and Actuaries, said the announcement that the Secondary Tax on Companies (STC) would be converted to a shareholders tax would also be positive for retirement funds.
He said: "Following the relief given last year by removing Retirement Fund Tax (RFT), the removal of STC also heralds a boost, arguably small, to the investment returns earned by retirement funds.
"The second stage of this proposal is to remove this tax, and rather have the shareholders pay the tax on dividends. This will be implemented in 2009."
The budget also proposed the qualifying age for the old age pension should be reduced from 65 to 63 this year for men, to 61 in 2009 and to 60 by 2010.
This week's edition of Professional Pensions is out now.
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