The new Default regulations and implementation
The default regulations were gazetted on 25 August 2017 and will have an effect on all existing retirement funds. This is the most significant new legislation since the surplus legislation of 2001, arguably since the enactment of the Pension Funds Act in 1956.
The regulations have an impact on systems, processes, communication, governance, reporting and advice. The Sanlam Umbrella Fund will have to be fully compliant with the new regulations by 1 March 2019.
In anticipation of these regulations, the Sanlam Umbrella Fund has already implemented a number of strategies that are broadly consistent with the principles underlying the new regulations. These include:
- Retirement Benefit Counsellors, who council members on Fund defaults
- A default Investment strategy
- A default Preservation strategy
- An Annuity strategy
Where required, further adjustments will be made in due course. The beauty of an umbrella fund governed by a professional board of trustees is that the onus to implement the new regulations rests with the trustees. No immediate action is required from participating employers and contracted benefit consultants aside from noting the regulations. If any changes are later introduced as a consequence of the regulations, these will be communicated to all affected parties at the appropriate time.
The regulations reaffirm that the Sanlam Umbrella Fund is on the right track, and is in a very good position to successfully implement all new requirements by 1 March 2019 with minimal adverse impact for our members.
You can read the official document from the National Treasury here.