The Countdown Begins for Retirement Funds to Comply with the Final Default Regulations
The final Default Regulations, issued in terms of section 36 of the Pension Funds Act, were recently issued by the South African Minister of Finance. They aim to provide retirement funds with greater discretion and flexibility in relation to their default investment portfolios and annuity strategies.
Below is an overview of the key terms of the final Default Regulations and the amendments that funds will need to make to their rules in order to comply with them.
Default preservation and portability (regulation 38)
This regulation will require that the rules of retirements funds, to which members belong as a condition of employment, be amended to allow for transfers of paid-up benefits into and out of such retirement funds; prohibit payment of any further contributions in respect of paid-up members and prohibit deductions from the retirement savings of paid-up members in respect of risk benefits; allow for retirement and early retirement for paid-up members and ensure that paid-up members are offered retirement benefits counselling before making any decisions.
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