Article source: SA News
National Treasury is taking steps towards implementing proposals that aim to lower charges and improve market conduct in the retirement industry.
Members of the public are invited to comment on the Draft Default Regulations in terms of section 36(1)(c) of the Pension Funds Act, No. 24 of 1956.
“The draft default proposals published for public comment today follow from the Treasury paper, Charges in South African Retirement Funds, published on 11 July 2013,” Treasury said.
The paper found that parts of the South African retirement system were characterised by complex and opaque products, with high charges.
Treasury said these factors make it impossible for consumers and employers to exercise choices in a way that leads to best outcomes for members of retirement funds.
“Low rates of preservation and participation in the retirement system, particularly by lower paid workers, exacerbate the problem, leading to higher than necessary costs and charges,” Treasury said.
The department said when the draft regulations are adopted they will require all retirement funds to operate a set of default policies that are in the long-term interests of members rather than of service providers.
The regulations will also prescribe the conditions that such default policies are required to meet.
“These proposals follow on legislation already enacted to harmonise the treatment of retirement funds, including a more equitable system of tax deductions for contributions, as well as enabling tax-free savings since 1 March this year.
“The Tax Laws Amendment Bills published today also contain proposals to close loopholes to ensure that no retirement funds are inadvertently excluded from reform measures already enacted,” Treasury said.
The draft default regulations are available on the National Treasury website (www.treasury.gov.za).
Comments on the Draft Default Regulations in terms of section 36(1)(c) of the Pension Funds Act, No. 24 of 1956 can be submitted by 30 September 2015, to Ms Alvinah Thela, Director: Retirement Funds, Private Bag X115, Pretoria, 0001; or fax to (012) 315 5206; or per email to firstname.lastname@example.org.