IN A NUTSHELL Trustees are not expected to be engineers or financial experts. Your role is to protect members’ money by asking clear, relevant questions and understanding the risks before money is committed to infrastructure projects.
Infrastructure investing can help retirement funds earn long-term, stable returns while also supporting economic and social development. These investments are often highly technical and can feel intimidating for trustees to unpack.
This list will help you ask the right questions during board meetings:
Ask whether the investment is in a single project, a portfolio of projects, a listed company, or an unlisted fund. Also, ask whether it is debt (lending money), equity (owning part of a project), or a mix of the two, as this affects both risk and returns. Make sure you understand why the specific vehicle or instrument was chosen.
Request a simple explanation of how the infrastructure project will generate income in the future. Who will pay for the service delivered by the infrastructure asset (government, companies, or the public), and how predictable are those payments over time?
Clarify who builds, operates and maintains the infrastructure. Ask what happens if the project is delayed, over budget, or underperforms. Who pays for it if the cost of the infrastructure ends up being more than expected?
Ask about guarantees, contracts, or security structures that protect investors, especially where government or municipalities are involved.
Trustees should ask for evidence of past successes and not rely only on promises. What similar projects has the manager successfully invested in before?
What could realistically go wrong in this project, and how would we know early if it is happening? Is there any risk of political interference, and what protections are in place? If the project is mismanaged or construction is delayed, what actions can the asset manager take to protect members’ money?
Ask how the investment complies with Regulation 28 limits and how it affects the fund’s overall diversification and liquidity.
Infrastructure investments are usually long-term and not easy to sell quickly. Ask what other assets the fund has that can be sold easily if money is needed for pensions or investing in other assets?
Ask how environmental, social and governance (ESG) factors are built into the project selection process from the start — and whether these risks are actively monitored throughout the life of the project, rather than simply reported on afterwards.
Request an explanation of how changes in laws, regulations, or political priorities could affect the project’s income. Who carries this risk if rules change, and what protections (such as contracts or guarantees) are in place to ensure payments remain predictable over time?
Request clarity on reporting: how often updates are provided, what information trustees will receive, and how problems will be identified and communicated early.
Infrastructure investing can benefit retirement funds, but only if it is done carefully, transparently and with strong governance. Trustees do not need technical expertise to play their role effectively. By asking the right questions, you help ensure that infrastructure investments serve both members’ retirement outcomes and the broader economy.
Further learning
To learn more about infrastructure investments, check out the Infrastructure Investments Information Hub. Or if you would like more in-depth knowledge, Atleha-edu and the ASISA Academy offer workshops for South African trustees and members of retirement funds on Infrastructure Investments and other themes.
Sources
FANews: Why do South African retirement funds appear hesitant to invest in infrastructure?
Futuregrowth: What to ask your asset manager investing in infrastructure; The Key to Successful Infrastructure Investment Integration
Moonstone: Regulation 28: trustees ‘need to raise their infrastructure investment skills’
Ninety One: Navigating the perceived risks of emerging market infrastructure
Pensions World SA: Real and perceived obstacles to infrastructure investment are falling away
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