How much do I pay?

When you join a fund, your contribution rate (percentage of fund salary) is usually set out in the rules of the fund.

Can I contribute more to the fund?

The rules of your fund will tell you whether you can make “additional voluntary contributions" over and above your set contribution rate. If you choose to make these additional contributions, you will save more towards your retirement and your fund credit will be more.

How much does my employer pay?

Your employer also contributes a pre-determined percentage of your fund salary to the fund, as set out in the fund rules. The costs of running and administering the fund are taken from these employer's contributions and the remaining amount is put towards your retirement benefit (fund credit).

How are contributions paid over from the employer to the fund?

The fund is a fully independent body from your employer. Your contributions, as well as your employer's contributions, are paid every month into the fund's bank account. No one can use this money except for your benefit as a member.

Investment Risk

Defined contribution funds

In a defined contribution fund, you carry the investment risk - the possibility of your money increasing or decreasing from time to time because of the movements in the stock market.

Defined benefit funds

Investment performance doesn’t directly affect your retirement fund assets in a defined benefit fund. This is because your employer must keep a promise to pay you a certain amount when you retire. This amount is worked out according to a formula, which takes factors such as years of service into account. Your employer will invest fund assets to create growth, but you don’t share the investment risk. If the fund’s investments are negative, then the employer will have to make up any shortfall when members leave or retire from the fund.

The Asset classes where your money is invested

  Type of investment Risk and growth

Cash investments are when you put money in a bank and the bank pays you interest. The interest you earn is called a ‘return’ on your investment. You can invest in cash when you need a secure ‘return’ and cannot run the risk of the value of your investment decreasing.

Cash is generally seen as the safest type of investment in the short term, because you will always get out at least the same amount you put in. However, in the long run you will not be able to grow your cash investment as much as other types of investments may be able to grow.


With bonds you lend money to the government, a parastatal or a large company that agrees to pay you interest on the amounts loaned. You also get your initial investment amount back at the end of a pre-determined period. Bonds are less risky than shares, but more risky than cash. They generally give better returns than cash over a longer period.

Bond values can change quickly because their value depends on interest rates. Bond values typically increase as interest rates drop, and drop when interest rates go up. Although it can be risky to invest in bonds, they are usually a less risky investment than shares.

Shares (equities)

Shares (also known as equities) are where you buy a share or part of a company. As a shareholder, you share in the profits of the company (dividends).
You can check the value of a share by reading the prices quoted on the Johannesburg Stock Exchange (JSE). These are the prices at which the shares are bought and sold, and are determined by the amount people are prepared to pay or receive to either buy or sell their shares on the open market.

The value of shares (equities) can change often and quickly, compared to other asset classes and are seen as very risky. Shares are likely to give you the best investment returns over the long term. This means your money will grow best if you invest in shares, but you also run the greatest risk of losing some or all of your original investment.


Investing in property generally means investing in industrial, retail or commercial real estate, either as a direct ownership or through a listed property company. You’ll get returns from rental income and also from changes in the value of the property through capital gain or loss.

Investing in property should not be confused with buying a house or other private property. In general, this type of investment is for someone with a longer-term investment horizon (at least five years), who wants a relatively stable return from year to year. Historically, investments in South African property as a type of investment have, over the long term, come second only to South African shares.

Alternative investments

Investments such as:

  • Infrastructure (roads and airports)
  • Private equity investments (investing directly in a particular company)
  • Hedge funds (reducing risk by implementing strategies that are often not dependent on the direction of the market).

Returns come from income on infrastructure investments and profits or losses made by the company invested in.

Earns more than property, fixed interest or cash in the long term.

What is the difference between single and multi-managers?

  • A single investment manager is a manager of investments (asset classes).
  • A multi-manager is a manager of investment managers.

Multi-managers don’t actually buy and sell asset classes, but rather manage the investment managers, who do this on their behalf. Ultimately, multi-managers blend the best assets to give the most appropriate investment management solution. To achieve this they:

  • Assess a fund’s investment needs.
  • Match these investment needs with a combination of single managers to meet them.
  • Monitor the investment managers to make sure they deliver the required performance.

A good multi-manager combines the services of selected single managers based on their proven ability in individual areas of expertise, depending on the fund’s particular investment requirements.