By Shruti Menon Seeboo
The role of the contemporary retirement fund is undergoing a profound evolution, moving away from a single-focus income vehicle towards becoming a multi-purpose institution for development. Presenting at the 7th annual Africa Pension Funds and Retirement Summit 2026 in Mauritius,Dr. Leslie Ndawana, the Chief Executive Officer and Principal Executive of the National Fund for Municipal Workers (NFMW), shared a vision that sits close to his heart: delivering positive outcomes for members whilst simultaneously driving broader socioeconomic transformation. This approach represents a vital alignment with changing governmental requirements and societal expectations, marking a definitive transition from simply doing well financially to actively doing good.
To understand where retirement funds are heading, it is necessary to look at how the pension fund environment itself shifted over time. The formal pension systems we recognise today were established during the 19th century alongside the expansion of formal employment spaces, such as the growth of the rail system and the emergence of town-based agricultural plantations in regions like Mauritius. Throughout the 20th century, these systems faced challenges ranging from underfunding and limited regulation to inflation and market volatility following World War II. The landscape shifted dramatically during the 1980s and 1990s with the widespread transition from defined benefit to defined contribution plans, a move that fundamentally transferred investment risks from the employer to the member.
In tracing this evolution, Dr. Ndawana outlines three distinct eras that have shaped the industry. The first was the conventional era, which prioritised the security of income through highly conservative retirement structures and fixed-income instruments like bonds and money market financials. This was followed by the modern era, where the investment space became institutionalised and grew highly complex, embracing financial advances such as hedge funds, derivatives, and private equity to diversify portfolios. Today, the industry is entering a post-current era. As Dr. Ndawana explains, “This is where the triple purpose approach is relevant. Financial goals are aligned with positive socioeconomic and sustainable growth, where we need to address issues of climate, environment, and governance which are very critical to the sustainability of the industry.”
This post-current era demands a completely different way of thinking. Contemporary pension funds are uniquely positioned to play a crucial role in sustainable development by investing in projects that align directly with human needs and the United Nations Sustainable Development Goals. On the African continent, this means capitalising on a massive market of 1.4 billion people through the African Continental Free Trade Area and aligning with major infrastructure programmes. Dr. Ndawana emphasises that regional fragmentation must be replaced by cooperation, noting that “there’s no need that other continents should use us as Africans to be their market. We can continue to create sustainable and in the market for working future.” By breaking down trade barriers and enhancing market access, pension funds can actively invest in industries that benefit the entire continent.
The socioeconomic challenges requiring this urgent capital deployment are vast and familiar, including unemployment, poverty, and food insecurity driven by climate change. Addressing these issues requires robust infrastructure, job creation, and sustainable peace, because an economy cannot function successfully where there is instability or conflict. To mobilise the resources necessary for large-scale developmental projects, Public-Private Partnerships (PPPs) offer a powerful framework. Within this ecosystem, governments must step up to establish stable regulatory environments and frameworks for pricing risk, while private sector expertise drives project management. Dr. Ndawana emphasises that the rule of law is a non-negotiable prerequisite for these long-term investments, stating that “it’s very difficult to invest in some of these projects if the political environment is unstable, the regulatory environment changes overnight, not sure whether you’re going to be able to enforce your contractual ten years down the line.”
Crucially, the success of these initiatives hinges entirely on the strength of internal systems rather than the sheer size of the fund itself. “It’s not necessarily the large funds that are strong,” Dr. Ndawana reflects. “It’s about governance. It’s about systems, about processes. It’s about the oversight.” When corporate governance fails, the entire infrastructure collapses. Effective pension fund management requires independent regulatory bodies, transparent reporting, and high levels of expertise within board structures to ensure that investment decisions remain strictly aligned with the long-term interests of the members.
To demonstrate that this philosophy is highly practical rather than merely theoretical, Dr. Ndawana points to the tangible transformation of the NFMW under his leadership. Prior to 2009, the fund stood at approximately 4 billion Rand, with 100 per cent of its asset allocation tied up in traditional instruments like domestic equities, property, government bonds, corporate bonds, and cash. It held absolutely zero allocations in infrastructure, energy, health, agriculture, housing, or environmental investments. Recognising that traditional asset classes often lack the high growth potential needed to solve significant developmental challenges, the fund intentionally rewrote its strategy. By 2020, the fund grew to 18 billion Rand, with nearly 9 per cent of its total portfolio deployed into impact investments via private equity and private credit. By 2025, the NFMW became a 40 billion Rand fund, aggressively pushing its impact investment allocation to 11 per cent—meaning that the fund now has 4 billion Rand dedicated purely to impact areas, an amount equivalent to the entire value of the fund back in 2009.
This remarkable growth underscores the ultimate message for the wider industry. Given the urgent need for infrastructure development, job creation, and economic transformation across Africa, pension fund strategies must evolve from simply providing secure income to retirees to becoming true agents of economic growth and prosperity for the broader society.
In the section below, Dr. Ndawana discusses the practical risk management frameworks needed for impactful development assets, his targeted strategies for mitigating membership and liquidity pressures within the local government sector, and how robust communication channels and advanced technological integrations sustain member trust. Furthermore, he expands on navigating the asset rebalancing and cash flow complexities brought about by South Africa’s new Two-Pot retirement system. Excerpts:
- In your presentation, you discuss the contemporary retirement fund adapting to the developmental requirements of our times. Practically speaking, how should a fund balance the immediate socioeconomic developmental needs of its members with its core mandate of long-term retirement security?
The key to this equation is essentially risk management which is even more valid when allocating capital to developmental assets. Rigorous risk control is essential, and especially vital for projects addressing broader socio-economic needs. In practice, this requires thorough due diligence to identify fund managers with proven track records, reliable execution strategies, and clear exit capabilities and off course, achieving return targets. Building a diversified portfolio that incorporates high-impact social investments must contribute to meet any funds’ set investment objective. Ultimately, this balanced approach will ensure long-term retirement security for members with good risk adjusted returns while simultaneously making a difference on the ground.
- Managing a fund specifically for municipal workers means your member base is directly affected by localized service delivery challenges and public-sector shifts. How does the NFMW insulate its long-term investment strategy from these localised structural headwinds?
As a municipal fund we will always be subject to changes and challenges within local government which may impact our membership base and cash flow position. We mitigate these challenges/risks over the medium to longer term as follows:
- Declining membership: As a competing fund in the local government space, we have a dedicated team of representatives that actively recruitment new members and assist current members as part of our retention strategy
- Liquidity challenges: As times we may face some liquidity constraints, which are carefully managed through continuous cash flow management and projections. As such, our investment portfolios will be adjusted timeously to ensure these requirements are met without adversely affecting investment returns
- Low public awareness and trust are cited as prominent issues in the African pension landscape. Given that municipal workers are highly unionized and politically aware, what communication strategies have you used to rebuild and sustain institutional trust?
We are very active, dedicated and consistent with communication to our members. Communication is arguably one of the most crucial and important aspects of modern-day pension fund management, which NFMW manages through a dedicated trustee committee and permanent communications team. On a high level our strategy includes:
- Timeously communicating regulatory changes and the practical implications thereof (for members)
- Keeping members informed of value-add services and fund benefits
- Regularly relaying fund performance in context with economic conditions
- Ensuring that members are aware of our dedicated team of retirement fund councillors to assist with financial planning and needs
Making sure members stay informed and up to date with all fund activities, benefits, management strategies and its socio-economic impact, builds trust over time. Sustaining the trust of members, comes when: “What is said, is what is done.”
- Moving with “the times” implies heavy integration of technology. How is your fund addressing the prevailing technology and infrastructure gaps to improve operational excellence and member engagement?
Off course, our fund embraces the use of technology in any way to improve our operations, workflow, communication and any other area which may benefit from enhanced technology. For example, from an operational perspective, we recently introduced “co-pilot” to some of our administration staff to enhance work efficiency. Member engagements and communication happen on so many levels, including through various social media platforms, posting of explanatory videos and digital reports. To stay abreast of the technology advances and the application thereof in practice, we constantly research new technological applications and improvements to offer a better service experience and interaction for and with our members.
- As a prominent South African fund executive, how is the implementation of South Africa’s new Two-Pot retirement system reshaping your liquidity management and long-term asset allocation strategy?
The two-pot retirement system has fundamentally changed cash flow and liquidity requirements for most pension funds in South Africa. It is probably fair to say that every Fund will have to find a way to manage such requirements based on their own cash flow experience and situation. For NFMW, which is fortunately (mostly) a cash flow positive fund, it has been much easier to navigate the liquidity requirements of the two-pot system. However, we had to adjust our thinking around maintaining our strategic asset class exposures, as the absolute amount of investable contributions have reduced after the regulatory change. In practical terms, we need to think more carefully about rebalancing between asset class exposures, as opposed to think about additional allocations to asset classes. We are fortunate, in that our long term asset allocation strategy can still be maintained post the two-pot retirement system implementation, however, this is carefully monitored on an annual basis.
