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.
For more information, please contact David Geral, Tashia Jithoo or Deirdre Phillips in the Banking & Financial Services Regulatory team at Bowmans.
