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| The Retirement Funds Industry: |
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| Retirement Funds in South Africa are governed by the Pension Funds Act No 24 of 1956 (as amended), that came into operation on 01 January 1958. Since then, all retirement Funds (Pension, Provident and Retirement Annuity Funds), must be registered in terms of this Act. |
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| The main aims of the Pension Funds Act are to: |
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- Register and regulate all entities operating as retirement funds.
- Protect the rights of members.
- That Funds maintain minimum solvency standards. That Employers do not renege on their commitments to employees and leave them destitute in their old age.
- The Funds, as separate legal entities, ensuring balanced ownership and accountability of the participating parties.
- Dissolve Funds that are financially unsound or wilfully violate the Act.
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| The main purpose of a Retirement Fund is to: |
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- Primarily provide for a retirement benefit, either as a lump sum or a regular monthly income (or both), to a member who reaches retirement age.
- Provide a lump sum or monthly income to persons who, for reasons such as permanent disability, are no longer able to remain actively employed.
- Provide for the dependants of an employee who may die before s/he reaches retirement age and, sometimes even after retirement.
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| A Retirement Fund is a fund of money or assets built up by the contributions of the employer and employees for the duration of their employment. Such Funds are set up by means of an agreement that is negotiated between an employer and his employees. Each Fund is set up in terms of Rules that determine who should pay contributions, at what rate, and who receives benefits. If tax relief on contributions and benefits is required, then the Commissioner for Inland Revenue must also approve of the Structure of the Funds. |
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