The rate at which a participating employer is required to contribute to the fund, which may change from time to time, is usually determined on a ‘balance of cost’ basis. The rate at which the member contributes to the fund is usually fixed as a percentage of that their pensionable salary. The member’s retirement benefit is determined by this formula and not by the contributions paid by the member. These are then classified in the records of the Registrar either as defined benefit funds or defined contribution funds.Ī defined benefit fund is a retirement fund which provides a retirement benefit that is determined as an amount equal to the member’s final average salary multiplied by the years of pensionable service, multiplied by an accrual factor determined in terms of the fund’s rules. Retirement funds in South Africa comprise pension funds, provident funds, retirement annuity funds, preservation funds, unclaimed benefits funds and beneficiary funds. The Transport Pension Fund, the Transnet Retirement Fund and the Transnet Second Defined Benefit Fund.ĭefined benefit and defined contribution pension funds.The Telkom Pension Fund and the Telkom Retirement Fund.The Government Employees Pension Fund (GEPF).The most significant of these funds includes: These funds are not subject to regulation and supervision of the Pension Funds Act, and by extension the Registrar of Pension Funds. There are several fundsthat were established in terms of specific provisions in statutes other than the Pension Funds Act. Pension funds not subject to the Pension Funds Act Regulation 28 includes the following asset class limits, which will be looked at further in the following brief: This is done by limiting the maximum exposure to certain asset classes. The main purpose of Regulation 28 is to protect the members’ retirement provisions from the effects of poorly diversified investment portfolios. Regulation 28 issued under the Pension Funds Act gives effect to Section 36(1)(b) of the Act, which limits the extent to which retirement funds may be invested in particular kinds of assets. Existing Pension Fund Act regulations on investment holdings The FSCA, which replaced the FSB and its mandate by the Pension Funds Act to license and supervise retirement funds, is now responsible for regulating and supervising the conduct of financial institutions, including those housing pension funds. The CEO of the PA is a SARB Deputy Governor. The role of the PA is to ensure the soundness of these institutions and infrastructures in order to maintain financial stability. The PA is housed in the South African Reserve Bank (SARB) and is responsible for the prudential regulation and supervision of financial conglomerates, banks, insurers, corporate banks, co-operative financial institutions and certain financial market infrastructure. Twin Peaks did away with multiple regulators and saw the establishment of only two regulators the Prudential Authority (PA) established on 1 April 2018, and the Financial Sector Conduct Authority (FSCA) on 1 April 2019. The legislation through which the new model is implemented is the Financial Sector Regulation Act, tabled in Parliament in October 2015 and enacted in August 2017. Reforms were initiated in 2011 towards a financial regulation regime called Twin Peaks, which came into full-effect on 1 April 2019. 24 of 1956) to license and supervise retirement funds, beneficiary funds, pension fund benefits administrators, and related persons and entities. The Retirement Funds Division of the Financial Services Board (FSB) is mandated by the Pension Funds Act, 1956 (Act No. Pension funds: legislative and regulatory framework This brief considers the legislative and regulatory framework for pension funds, the regulations on investment holdings currently in place, funds which are not subject to the Pension Funds Act, descriptions of the different types of pension funds and a broad overview of the South African pension fund industry at present. Shortly thereafter, Briefs 2 to 5 will be published, and finally Briefs 6 to 8. Funds other than pension funds which might be pressed into financing SOE’sīriefs 1 and 9 summarize the approach and findings, and they will be published first.The Government Employees Pension Fund and other public sector funds not regulated by the Registrar of Pension Funds (2).The Government Employees Pension Fund and other public sector funds not regulated by the Registrar of Pension Funds (1). Funds regulated by the Registrar of Pension Funds.The series deals with the following topics:
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