After broad consultations with various interested stakeholders, the Minister of Finance issued the final retirement funds default regulations made in terms of section 36 of the Pension Funds Act (No. 24 of 1956).
The new regulations aim to ensure that members of retirement funds get good value for their savings. It will also compel boards of retirement funds to offer default in-fund preservation arrangements to members who leave the services of their employers before retirement age.
The final Retirement Funds Default Regulations were published on 25 August 2017:
- All new default arrangements that come into operation on or after the 1 September 2017, must comply with the requirements set out in the regulations, the Registrar has published an 18 month exemption from the regulations to allow time for existing funds to comply where required).
- Existing default arrangements should be fully aligned to the regulations 18 (eighteen) months after the effective date (1 September 2017) of the regulations, i.e. by 1 March 2019.
These regulations require funds to have:
- Default investment portfolios for the investment of retirement savings.
- Default annuity strategies for members upon their retirement.
- Default preservation rules for members on termination of membership before retirement.
The default investment and preservation rules do not apply to retirement annuity and preservation funds. They only apply to pension and provident funds to which members belong as a condition of employment.