On 1 March 2019, three new regulations on retirement savings came into effect. These default regulations impact three important areas of retirement saving:
- how a member’s contributions are invested while you are accumulating savings (Regulation 37 of the Pension Funds Act),
- how easy it is to leave savings invested when a member changes jobs (Regulation 38); and
- the options members have available to convert their retirement savings into a monthly pension for life when they retire (Regulation 39).
Members will further also benefit from retirement benefits counselling to provide information and explain the implications of these default options.
Twané Wessels, a member of the Investments Committee of the Actuarial Society of South Africa (ASSA) recently commented on the significance of Regulation 39 and the tough financial decisions individuals have to take at retirement.
Wessels said while the lack of adequate savings for retirement remains a critical problem, default annuity options are likely to enable better decisions for the savings available to pensioners. “While retirees will still be able to use a financial adviser and opt for any of the products available on the broader market, retirement funds will from now on be required to provide quality, easy-to-access solutions supported by simple communication and guidance”, Wessels remarked.
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