The POLITICAL OFFICE-BEARERS PENSION FUND is a Defined Contribution fund (following changes made with effect from 1 March 2016). The investment performance of a Defined Contribution arrangement, whether good or bad, has a direct effect on the amount of benefits that you will receive from the Fund. The investment strategy chosen by the Trustees for the Defined Contribution component of the Fund is therefore an important matter for Fund members to be aware of. The Fund’s investment strategy is detailed in its Investment Policy Statement.

The Fund’s investment strategy was reviewed by the Trustees during 2015 and some changes were made to the strategy in February and March 2016. This section describes the current strategy including the changes made in 2016.



  • The Trustees have adopted a medium-term time horizon in formulating the Fund’s investment strategy. This means that the overall success of the strategy will be measured over periods of at least 5 years, which corresponds to the expected length of members’ terms of office from one Election to the next.
  • The Fund’s investments should be managed in a manner that is honest, transparent and ethical. Where consistent with the Fund’s philosophy and objectives, a portion of the Fund’s assets should be invested in socially-responsible investment portfolios.
  • The Fund is also required to comply with Regulation 28 to the Pension Funds Act. This Regulation was changed during 2011, and now sets out certain principles which Trustees must apply in respect of the Fund’s investments, as well as so-called “prudential investment limits” that the Fund must comply with.


Recognising the need to protect members against both short-term fluctuations (volatility) on the investment markets and long-term inflation risk, the Trustees have agreed on the following overall investment objectives for the Fund:

  • To provide reasonably competitive market-related returns to members, with exposure to the asset classes normally considered for investment by South African pension funds (including the domestic and international equity and bond markets)
  • To provide a higher than normal degree of protection against the fluctuations of the equity markets by favouring an asset allocation that has significantly lower exposure to equities than the typical SA retirement fund
  • To maintain sufficient flexibility to vary the investment policy (for example by moving to a member-choice structure) without undue restrictions.

The Fund’s performance objective is to deliver to members a net investment return that exceeds inflation by at least 4% per year, measured over any 5-year period.


The investment structure was changed in November 2011, at which time the Fund moved away from so-called “balanced” investment mandates (the approach first adopted by the Fund in 1999, in which each of the Fund’s investment managers managed a portfolio containing a mixture of shares, bonds and money-market investments), to a “specialist” approach. Under the new “specialist” approach, the Trustees chose investment managers specifically for the different asset classes (such as shares, bonds and property investments). Appointing managers who specialize in particular asset classes makes it easier for the Trustees to monitor the performance of the managers and hold them to account.

Further changes were made to the Fund’s strategic asset allocation and to the line-up of investment managers and investment products used by the Fund, in February and March 2016.

The new investment structure is as follows:

  • Some 32% is invested in SA Equities (shares) – this section of the Fund is split among four managers, namely Oasis, Kagiso, First Avenue and Old Mutual. The first three of these are actively-managed portfolios, while the Old Mutual portfolio tracks the All-Share Index. Kagiso and Oasis manage larger portfolios than the other two managers.
  • Some 36% is invested in SA interest-bearing investments (bonds and money-market instruments). This section of the Fund is split among four investment firms, namely Coronation, Futuregrowth, the PIC and 27four. The allocation to 27four, which is smaller than the allocation to the other two managers, is invested in the 27four Emerging Manager Bond Fund – 27four have chosen two small Black investment firms as the underlying managers for their Bond Fund. The Futuregrowth portfolio is invested in their Infrastructure and Development Bond Fund, which has a social-responsibility focus. The Coronation portfolio is benchmarked against a blend of nominal and inflation-linked bond indices while the Futuregrowth, PIC and 27four portfolios are benchmarked against the All-Bond Index of (only) nominal bonds.
  • Some 7% is invested in SA property investments. This section of the Fund is partly invested in Futuregrowth’s Community Property Fund, which owns shopping centres in disadvantaged communities, and the balance is invested in an actively-managed listed property portfolio managed by Sesfikile.
  • The remaining 25% is invested outside South Africa in a blend of global equities (shares) and bonds. This section of the Fund is partly invested in the Orbis Global Equity Fund, and partly in a multi-class Global Balanced fund managed by Ninety One (formerly Investec Asset Management).

The investment returns, after allowing for fees and expenses, are calculated each month by the Fund’s actuaries and consultants. These returns (positive or negative) are then credited to the members’ Fund Credits – please refer to the section of this member guide dealing with Benefits, to understand this better. Currently there is a single pool of investments backing all of the Fund’s liabilities – the Fund does not provide investment choice for members.

Legal disclaimer

Investment is a complex area and every attempt has been made to simplify this for ease of understanding. This may result in some areas being covered in relatively little detail. Readers should note that:

  • Past investment performance is not necessarily a guide to future investment performance. Statistics shown in the guide are based on past performance
  • The information contained in this guide does not constitute “financial advice” to members by either the Board of Trustees or its advisors.