SECOND DRAFT REGULATION 37, 38 AND 39 TO THE PENSION FUNDS ACT PUBLISHED FOR PUBLIC COMMENT
National Treasury released a revised draft Regulation 37, 38 and 39 to the Pension Funds Act, 1956 on Friday 9 December 2016 for public comment. Following comments from the public on the first draft of the regulations, National Treasury revised the draft regulations taking into account the following objectives:
- Making compliance easy, thereby aiding in reducing compliance costs;
- Enabling flexibility by using a principles-approach to regulation; and
- Encouraging and facilitating better and appropriate decision-making by members of retirement funds.
Some of the changes include:
- Removal of the prohibition of performance fees in default investment portfolios;
- Clarifying that the default investment portfolio regulation is only applicable to defined contribution retirement funds;
- Clarifying that retirement benefits counselling is limited to the provision of information and not advice as contemplated in the Financial Advisory and Intermediary Services Act, 2002; and
- Removing the requirement that preserved funds be automatically invested in the default investment portfolio.
Comments on the revised draft must be submitted to National Treasury before 28 February 2017. A copy of the revised draft regulations as well as National Treasury’s explanatory memorandum to the revised draft can be accessed on National Treasury’s website here.