The Minister of Finance recently implemented the final retirement funds default regulations made in terms of Section 36 of the Pension Funds Act. The regulations are intended to improve outcomes for retirement fund members by aiming to provide better value in terms of their savings so that they can ultimately retire comfortably.

The regulations require retirement funds' trustee boards to offer:

  • a default in-fund preservation arrangement to members who leave the services of the participating employer before retirement;
  • a default investment portfolio to contributing members who do not exercise any choice regarding how their savings should be invested;
  • for retiring members an annuity strategy with options, either in-fund or out-of-fund, and can only "default" retiring members into a particular annuity product after a member has made a choice.
The effective date for the regulations is 1 September 2017 and all new default arrangements that come in to operation on or after the effective date must comply with the requirements set out therein. Funds with existing default arrangements will be expected to comply within 18 months i.e. by 1 March 2019.

As with any new regulations, trustees and industry bodies are preparing to better understand and to implement the requirements.

The regulations will be continuously assessed so as to enable necessary updates ensuring that members of funds are protected against excessive fees as well as overly complex, non-transparent products and bad practices.


An Unclaimed Benefit is a benefit which has not been claimed by a former member or beneficiary within 24 months of the date in which it, in terms of the rules of the Fund, became legally due and payable.

The latest Annual Report of the Registrar of Pension Funds states that approximately R 20 billion in Unclaimed Benefits is owed to about 3.5 million beneficiaries.

The Destiny Retirement Funds have an Unclaimed Benefits Policy which includes tracing processes in order to lessen the number of Unclaimed Benefits and to ensure that, where possible, members are paid.

Taking the above into consideration, the FSB, with the support of the Retirement Fund Industry, has created an Unclaimed Benefit search engine where members and beneficiaries can determine if there are Funds owing to them. This tool is available on the FSB website.


The proposed legislation to bring all Retirement Funds in line i.e. for provident fund members to annuitise (buy an income) two thirds of their share of fund at retirement has again been postponed, this time until 1 March 2019. This proposal would only apply to new contributions made to a provident fund after the implementation date.

Nevertheless, provident fund members continue to benefit from the tax deduction allowed for pension and retirement annuity funds which was harmonised in 2016.

The reason provided for the postponement is to give the Minister of Finance time to consult with stakeholders.


With effect from 1 July 2017, SARS implemented Administrative Penalties which must be deducted from a member's benefit payment. These penalties are in respect of non-compliance in the submission of tax returns for prior tax years. SARS has noted that it is advisable for taxpayers concerned to contact them with their specific cases.


Discussions are still in progress with regards to introducing a National Social Security Fund (NSSF). The fund's purpose will be to provide a low cost, equitable vehicle for the provision of basic risk and retirement savings benefits. The NSSF aims to protect income earners through the provision of basic retirement, unemployment, death and disability benefits. Contributions for all workers will be mandatory to the NSSF up to a certain threshold and contributions over and above the threshold can be made to a group or individual retirement fund solution.

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