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Retirement Fund Update October 2013

A note from the Editor

In this publication, we report on the latest legal-technical developments in the Retirement Fund Industry. The update has been compiled with a view to bring to the attention of trustees and principal officers, the developments that are necessary to ensure good fund governance and compliance.

Your contracted Consultants & Actuaries consultant will be happy to discuss these matters at your next trustee meeting. Please note that it forms part of the continued education programme for trustees and, where appropriate, it may require the Board to make amendments to the Fund Governance and Risk Management Plan and other documents.
Kobus Hanekom

To download any one of the following documents, click on the link below:

Retirement Fund Update September 2013

Directive 7: Revised financial statements

Revised financial statements

PFA determination in Affirm Marketing vs. IF Umbrella Pension and Provident Fund

Taxation Laws Amendment Bill 2013<

Retirement reform: National Treasury’s cost paper ‘Charges in South African retirement funds’

Simeka comment on the National Treasuries Cost Paper

Protection of Personal Information Bill



September 2013 Bulletin Update

A note from the Editor

One of the themes emerging from the retirement reform papers is the shift in the perceived duties and responsibilities of retirement fund trustees. In the latest paper, National Treasury recognises that the primary purpose of a retirement fund is to provide members with an income in retirement. It is therefore part of the responsibility of trustees to guide members through the annuitisation process.

The focus appears to be shifting away from the mere ‘protection of member assets in terms of the rules of the fund’ to ‘securing good retirement outcomes for members’. In this edition we investigate more ways in which trustees can secure a good retirement outcome for members.
Kobus Hanekom

In this edition of the Baobab Bulletin we consider and comment on the following issues:

PPR: A creative new approach to estimating retirement benefits
The sooner we align our calculators with members’ remuneration net of contributions and the new tax formulas, the sooner retirement fund members will have a more direct understanding of the level of their needs at retirement and the level of the contributions they have to make. Read more

Employers to embrace their leadership position
We encourage employers to embrace their leadership position in respect of the provision of retirement benefits for their employees. You may wonder why this is necessary or important? It is, because the important work done by employers in this regard may have been obscured by the establishment of equal representation on the boards of trustees over the past decade. Read more

Life-stage as a default investment strategy
National Treasury proposed that each fund be required to select a default investment portfolio linked to a default annuitisation strategy. This requirement will place a much greater responsibility on the trustees to design a holistic investment and annuitisation strategy for their members. Read more

The power of preservation illustrated
It is well-known that most South Africans take their withdrawal benefits in cash when changing jobs. Our calculations show that not preserving a withdrawal benefit payable after the first 10 years of service will reduce a member’s projected pension ratio from 75% to 44%. Read more

Disclaimer: This publication provides information and opinions of a general nature. It does not constitute advice and no part thereof should be relied upon without seeking appropriate professional advice. Simeka (Pty) Ltd. is an authorised Financial Services Provider.