What's Happening?

Facebook Twitter Youtube Linkedin

NEED HELP? QUESTIONS@FIA.ORG.ZA

become A FIA member TODAY
member login

Updated two-pot pension system regulations protect liquidity, brings certainty to grey areas

ARTICLE BY

  • Old Mutual

SHARE THIS POST

Old Mutual today welcomes the revised 2023 Draft Revenue Laws Amendment Bill made available for public comment on Friday. This is a significant step forward and brings much-needed clarity to several crucial grey areas, specifically concerning seeding and accessibility within the new regulatory framework.

Retirement Reform Executive at Old Mutual Michelle Acton said, most notably, the updated regulations would allow the industry to be in a better position to be ready by 1 March 2024, the date government expects the retirement funds to be prepared to implement the new laws.

“While the timeline is challenging, the release of the draft legislation and further confirmation of the 1 March 2024 effective date offers us clarity in constructing the intricate systems necessary for processing the appropriate claims. A considerable amount of effort is needed to ensure readiness, as entirely new and advanced automated systems must be developed to facilitate the efficient access of eligible portions of savings for fund members,” said Acton.

“Old Mutual fully supports these reforms, and we consider them to be pivotal, propelling us closer to achieving much better retirement outcomes for members,” she said.

The 2022 Draft Revenue Laws Amendment Bill was released in July last year for public comment. It proposed that the two-pot system will allow pension and provident fund members, as well as retirement annuity policyholders, to access a portion of their retirement savings before retirement age without resigning.

More importantly the new draft legislation provided certainty on seeding, defining the portion of current savings allowed to fund the accessible savings pot (now referred to as the savings component). The draft legislation now indicates that from 1 March 2024 a maximum of 10%, capped at R25,000, of the member’s existing savings will be used to seed the accessible pot.

“The industry has eagerly awaited the inclusion of the seeding element, which is now addressed in the draft legislation. The conditions suggested of a 10% limit, capped at R25000 mean that funds can seamlessly navigate any liquidity issues that may have arisen had the quantum been significant. We are confident that the manageable seeding will have minimal impact on the liquidity requirements of retirement funds,” added Blessing Utete, Managing Executive of Old Mutual Corporate Consultants.

Utete further emphasised that Old Mutual also welcomed the confirmation that provident fund members over 55 would have the option to stay and continue contributing to their current provident fund or to move to the new two-pot regime.

We are also heartened by the fact that retirement annuity funds which are underpinned by legacy fund member policies will have an option to apply for an exemption from the two pot reforms. “This is important because these policies were never designed to allow for access prior to reaching retirement age.

He added that the regulations stipulated that defined benefit funds would be accommodated. These funds do not refer to contributions made by a member to the defined benefit fund to determine benefits, but rather uses a defined formula to calculate benefits due to a member on retirement. To manage this the proposed legislation provides that the reference point for calculation of the member’s interests in defined benefit funds and the consequent adjustments thereto to facilitate the two pot reforms will be the relevant member’s pensionable years of service.

“We are encouraged with the process to date. Commentary closes on 15 July, so we anticipate these regulations will be gazetted early next year. Such certainty is invaluable to us, and we are much more comfortable now that we can move ahead full steam,” said Acton.

Subscriber Terms and Conditions

  1. APPLICATION OF TERMS
    • These terms and conditions (“Subscriber Terms”) apply to the subscription by any qualifying member of the South African Underwriting Managers Association NPC (“SAUMA”) to the services and benefits offered by FIA Services (Pty) Ltd (“FIA Services”) under the SAUMA affiliation arrangement (“Subscription”).

  2. NATURE OF SUBSCRIPTION
    • A Subscription under this arrangement:
      • does not constitute membership of FIA NPC;
      • does not confer any voting rights or governance participation in FIA NPC; and
      • is governed solely by the contractual relationship between the Subscriber and FIA Services.

  1. ELIGIBILITY
    • To qualify for the Subscription, the applicant must, at the time of application, be a current paid-up member of SAUMA.
    • FIA Services will verify the applicant’s SAUMA membership status with SAUMA prior to activation, and may re-verify such status periodically.
    • If a Subscriber ceases to be a paid-up member of SAUMA, the Subscription will correspondingly be terminated.
    • Applicants are required to authorise FIA Services to confirm their SAUMA membership status with SAUMA as part of the application process.

  1. SERVICES
    • The Subscription entitles the Subscriber to the following benefits:
      • Complimentary access to the FIA CPD Platform;
      • Complimentary access to the FIA Insight Magazine (digital edition);
      • Advertising opportunities on FIA platforms at a discounted rate of 15% (fifteen percent) off the prevailing published rates; and
      • Invitations to attend FIA Technical Webinars annually.
    • FIA Services reserves the right to update, vary or substitute the Services from time to time, provided that the overall value and nature of the benefits remain materially the same.

  1. FEES AND PAYMENT
    • The monthly subscription fee is R260.00 (two hundred and sixty rand) for up to seven registered individuals (Key Individuals and Representatives), and R36.00 (thirty-six rand) per additional registered individual thereafter, excluding VAT.
    • The Subscriber shall provide FIA Services with the required details of each individual to be registered under the Subscription for the purposes of activation and billing.
    • All fees are exclusive of VAT, which shall be charged at the prevailing statutory rate.
    • Subscription fees are reviewed annually in March and may be adjusted with effect from 1 April.
    • Any changes to the Subscription, including but not limited to the number of Representatives and Key Individuals registered under the Subscription, may only be effected once annually during the annual review period in March of each year, with such changes taking effect from 1 April.
    • Subscription fees shall be billed monthly in arrears, unless the Subscriber elects an annual billing cycle at the time of application.
    • The Subscriber shall ensure that all billing information (including contact details, authorised signatories and bank account details) is kept accurate and up to date.
    • Non-payment of subscription fees may result in suspension of access to the Services until such fees are brought up to date.
    • The Subscriber acknowledges and agrees that all subscription fees payable under these Subscriber Terms may be collected by way of debit order, which shall be processed by the holding company, FIA NPC (The Financial Intermediary Association of South Africa), on behalf of FIA Services. Payment to FIA NPC shall be deemed to constitute valid and sufficient discharge of the Subscriber’s payment obligations to FIA Services under these Subscriber Terms.

  1. ONBOARDING
    • Onboarding will be conducted as a Subscription with FIA Services under the SAUMA affiliation arrangement.
    • Onboarding will not confer FIA NPC membership status or any associated rights.
    • Onboarding is conditional on confirmation of the Subscriber’s current SAUMA membership at the time of application

  1. DATA PROTECTION
    • FIA Services will process all personal information in accordance with the Protection of Personal Information Act 4 of 2013 (POPIA) as set out in our POPIA policies.
    • By subscribing, the Subscriber authorises FIA Services to confirm their SAUMA membership status with SAUMA and to process personal information for the purposes of fulfilling the Subscription.

  1. TERMINATION
    • The Subscriber may terminate the Subscription by giving FIA Services one calendar month’s written notice.
    • FIA Services may terminate the Subscription on one calendar month’s written notice, or immediately if the Subscriber breaches these Subscriber Terms and fails to remedy such breach within 14 (fourteen) days of receiving written notice.
    • Termination of the SAUMA–FIA Services affiliation agreement shall not automatically terminate these Subscriber Terms.
    • Termination by the Subscriber shall not relieve the Subscriber of liability for any subscription fees accrued up to the effective date of termination.
    • FIA Services may suspend or terminate the Subscription with immediate effect in the event of non-payment of fees by the Subscriber.

  1. GENERAL
    • These Subscriber Terms are governed by the laws of the Republic of South Africa.
    • Any disputes arising under these Subscriber Terms shall be dealt with in accordance with the dispute resolution provisions contained in the FIA NPC membership terms and conditions, as modified to reflect that the contractual relationship is with FIA Services.
    • Any notices required under these Subscriber Terms may be validly delivered by email to the addresses provided in the Subscriber’s application form, and such notices shall be deemed received on the day of transmission if sent during business hours.
    • The Subscriber may not assign, cede or transfer any of its rights or obligations under these Subscriber Terms without the prior written consent of FIA Services.
    • No variation of these Subscriber Terms shall be of any force or effect unless reduced to writing and signed by both FIA Services and the Subscriber.