Infrastructure equity targets outpace SA government bonds by up to 2.6 percentage points

Nominal return comparison, % per annum — SA government bond yields as at September 2026; infrastructure target = CPI + 7% industry benchmark

+2.6pp

infrastructure premium over
the SA 10-year bond (at 4.4% CPI)

R5.8trn

SA pension assets available
to fund this shift (Oct 2025)

Traditional model — government bonds

Direct real-asset model — low-inflation scenario (CPI 3.2%)

Direct real-asset model — mid-inflation scenario (CPI 4.4%)

South Africa's pension funds channel the majority of their R5.8 trillion in assets into government bonds that currently yield 8.66% (10-year) to 9.44% (30-year), but deliver a long-run real return of only 2–3% per annum above inflation. But infrastructure equity, the CPI-plus-7% benchmark cited by fund managers, would generate 10.2–11.3% nominally at current inflation levels — a gap of 0.8 to 2.6 percentage points before adjusting for inflation protection. Despite a 45% Regulation 28 infrastructure cap introduced in 2022, the PIC and GEPF currently allocate only around 10% of assets to unlisted real assets — meaning the higher-returning model remains largely unrealised, constrained less by regulation than by the scarcity of bankable projects.