pension fund act regulation 28

Promote the education of trustees in respect of governance, investments and related matters 2. ... (Protection of Funds) Act, 2001 (Act 28 of 2001), and all other applicable laws. Commencement. Here’s what changes in Regulation 28 of the Pension Fund Act – #KayaBiz . 80 of 1959 Neither Prudential Portfolio Managers (South Africa) (Pty) Ltd (“PPMSA”) or The Prudential Assurance Company are affiliated in any manner with Prudential Financial, Inc., a company whose principal place of business is in the United States of America or Prudential plc, an international group incorporated in the United Kingdom. 24 of 1956), hereby amend Regulation 28 of the Regulations made under section 36 of the Pension Funds Act and published under Government Notice No. Prudential Investment Managers • October 2016, Prudential Investment Managers • June 2018, Prudential Investment Managers • March 2021, Prudential Investment Managers • February 2021. It lays down rules, but requires boards to apply vague principles, this despite the “general lack of investment expertise among trustees.” It acknowledges funds must, first and foremost, act in the best interest of their members, then justifies the changes to asset limits on a host of ulterior grounds. We have placed cookies on your device to help improve your web experience. Are you interested in investing towards retirement? PENSION FUNDS ACT NO. Reg 28 is an exercise in contradiction. However, principles were also introduced to strengthen the investment decision-making processes and improve the transparency and accountability by retirement funds to a retirement fund’s members and the Registrar of Pension Funds at the FSCA (Financial Sector Conduct Authority). section 40C of the Pension Funds Act, 1956 (Act No. The most important element of Regulation 28 is the limit it imposes on money managers’ allocation of retirement savings to certain asset classes. 24 of 1956, as amended (the Act) in order to provide the Board of Fund of (the Fund) with a reasonable assurance opinion that Schedule IB “Assets held Regulation 28 gives effect to Section 36(1) (bB) of the Pension Fund Act, which limits the extent to which retirement funds (like retirement annuities) may be invested in particular kinds or categories of assets. In a statement issued on Thursday, the department said, due to technical problems currently being experienced by the Government Printing Works, publication of the Gazette was delayed until 1 March 2021 and backdated 12 February 2021. The Pension Funds Act 24 of 1956 aims: to provide for the registration, incorporation, regulation and dissolution of pension funds and for matters incidental thereto. Some of the key principles to be applied by the fund and its board: 1. “Regulation 28, issued in terms of section 36(1)(bB) of the Pension Funds Act, reduces excessive and concentration risk to member savings and ensures protection by … The Treasury is proposing changes to Regulation 28 of the Pension Funds Act in draft amendments published for public comment on Friday. This means that investors may now allocate up to 40% of assets outside South Africa in terms of Regulation 28 of the Pension Funds Act, which … This was done with the intention to safeguard funds against imprudent decision making and. Report on Compliance of Schedule IB with Regulation 28 of the Act We have undertaken our engagement in accordance with Section 15 of the Pension Funds Act No. Retirement funds may also invest up to 10% of their assets directly into unlisted equities, rather than making the investment via a private equity fund. On 23 February 2018 the Minister of Finance, Pravin Gordhan, announced changes to Regulation 28 of the Pension Funds Act. R.99 of 26 January 1962, as amended. It aims to foster prudent investing, but there is nothing inherently prudent about the asset limits. Amendments to Regulation 28 of the Pension Funds Act to encourage investment in infrastructure: request for public comment deadline. These allowances hold much potential for retirement funds and unit trusts as more index tracking and retail products around commodities and alternative investments are made available. Here you will get News from all over the world basis on 15+Sectors. The proposal to amend the Pension Fund Act came after Tito Mboweni delivered the National Budget Speech on 23 February. Pension Funds Act, 1956 (Act No. See your browser's documentation for specific instructions. Regulation 28 sets asset exposure limits and establishes investment principles. (English text signed by the Governor-General.) Public comment on draft Regulation 28 amendment of Pension Funds Act In a statement issued on Thursday, the department said, due to technical problems currently being experienced by the Government Printing Works, the publication of the Gazette was delayed until 1 … The revised Regulation 28 of the pensions fund act, came into effect as of 1 July 2011 which. It provides guidance to trustees on how to formulate appropriate investment strategies to provide This is done by limiting the maximum exposure to more risky asset classes, making sure that no unnecessary risks are taken … In this Schedule, “Regulation 28” means Regulation 28 of the Regulations made in terms of section 36 of the Pension Funds Act, 1956 (Act No. What is Regulation 28? Combined exposure to both asset classes is limited to 15% in total. Investors in Regulation 28-compliant unit trusts like the Prudential Balanced, Inflation Plus and Enhanced Income Funds can be assured of appropriate asset allocation strategies for their long-term retirement savings that are actively managed to achieve the best possible risk/return balance over time. Take a responsible investment approach that will earn adequate risk-adjusted returns suitable for the funds’ specific member profile, li… In practice, most funds already comply with this as it is a requirement of PF130. According to this amendment, the aim of this regulation is to "ensure that the savings South Africans contribute towards their retirement is invested in a prudent manner that not only protects the retirement fund member, but is channeled in ways that achieve economic development and growth". They must also have a formal Investment Policy Statement (IPS). It limits the extent to which retirement funds may invest in particular assets or in particular asset classes. This rule sets the maximum percentage of a fund's … Regulation 28 specifically addresses these limitations. The change to the offshore investment allowance also immediately causes a change to Regulation 28 of the Pension Funds Act. The main purpose is to protect the members’ retirement provision from the effects of poorly diversified investment portfolios. This regulation is part of the Pension Funds Act. Amendment of subregulation (1) 2. South African shares can and do take large knocks in the shorter term, and the required thresholds have certainly provided some value protection for individuals nearing retirement age. Examination of fund by Registrar 30. 28th February 2021 by Jackie Cameron The National Treasury has published draft amendments to Regulation 28 of the Pensions Fund Act to encourage investment in infrastructure. Commodities have also been recognised as a separate asset class; this is also subject to a 10% limit of total fund investments. Speak to a financial adviser or find out more about Prudential’s Regulation 28-compliant funds by contacting our Client Services Team on 0860 105 775 or at [email protected] for more information. equities. The overall objective is to protect consumers by restricting the allocation of investor funds to riskier assets on the one hand, but on the other hand to allow for the selection of more strategic and complex options. Furthermore, in our environment of local bond market rating downgrades, low offshore interest rates and volatile global equity markets, spreading funds across borders and asset classes is a responsible investment strategy and does provide the best downside protection for an individual’s hard-earned savings. Momentum is part of Momentum Metropolitan Life Limited, an authorised financial services and registered credit provider. Regulation 28 is issued under the Pension Fund Act. Retirement investing can be done via a retirement annuity (RA) investment vehicle (or “wrapper” as it is also known), or simply directly into the unit trust as part of an overall nest egg. Prudential Portfolio Managers (South Africa) (Pty) Ltd (“PPMSA”) is part of the same corporate group as the Prudential Assurance Company. ... enforce any conditions imposed under this Act on a pension fund, trust or the manager of such a fund or trust; and. Regulation 28 is part of the Pensions Fund Act and aims to ensure that individuals’ hard-earned savings are invested in a sensible way and protected from poorly diversified portfolios. Regulation 28 is part of the Pensions Fund Act and aims to ensure that individuals’ hard-earned savings are invested in a sensible way and protected from poorly diversified portfolios. Short title 2. The Act on Regulation 28. The amendment to Regulation 28 of the Act prescribes the maximum exposure that retirement fund investments may have to various asset classes, for example: To read more about the Act on Regulation 28, please click here. There is now also a provision for investment in unlisted property, whether by holding properties directly or by investing in various pooled structures. Regulation 28 is primarily rules-based. As part of the Pension Funds Act, 1956, all retirement annuities offered by financial service providers must be Regulation 28 compliant. It is only since 2011 that RAs have had to comply with the same set of rules. 24 of 1956), published in Government Notice No. 28. Javascript is disabled in this browser. (Assented to 28th April, 1956.) The National Treasury today has published its draft amendments to Regulation 28 of the Pension Funds Act for public comment. 4 Mar 2021 SHOWS. This move has been widely expected, as the cash-strapped South African government needs to find funds to support its plans. Regulation 28(2)(b) of the regulations to the Pension Funds Act, 1956 (“the PFA”) requires all funds to have an investment policy statement and Regulation 28(2)(c)(ix) requires that boards of funds consider environmental, social and governance factors before investing in an asset. No. Retirement investing can be done via a retirement annuity (RA) investment vehicle (or “wrapper” as it is also known), or simply directly into the unit trust as part of an overall nest egg. Of course, limiting funds to a 75% exposure to equity, an asset class that has outperformed all others over time, does add validity to the criticisms of the regulation, especially from young investors with large risk appetites and long-term horizons. Pension funds can— should they want to exceed the prescribed limits—request an exemption from the Financial Services Board. The underlying portfolios of RAs and Regulation 28-compliant unit trusts are limited to exposures of 75% in equities, whether in South Africa or abroad, 25% in local or international property, 25% in foreign investments, excluding Africa, and 5% in Africa (outside South Africa) of the total capital invested. Regulation 28 Section 36 (1) (bB) of the Pension Funds Act, 1956 empowers the Minister of Finance to make regulations limiting the amount and the extent to which a retirement fund may invest in particular assets, e.g. 1.SPORTS 2,TECHNOLOGY 3.ECONOMY 4.EDUCATION 5.ENERGY 6.POLITICS 7.LAW & GOVERNANCE 8.HEALTH 8.SCIENCE 10.SOCIAL 11.TRANSPORT 12.AGRO-FORESTRY 13.ART & CULTURE 14.AGRO-FORESTRY 15.Urban Development 16.Wash The revised Regulation 28 of the Pension Funds Act regulates how retirement funds should invest their assets to ensure that their long-term commitments to members are met. This is an important distinction for investors who are saving towards retirement and want to ensure that their investment is not overly risky. Unsafe and unsound practices 29. This page requires Javascript. 24 of 1956) 8 Introduction ©2020 Momentum Metropolitan Life Limited. The main purpose of Regulation 28 is to protect the Modify your browser's settings to allow Javascript to execute. Its purpose is to protect individuals’ retirement savings through responsible fund management. Thereby, Regulation 28 aims to protect the investor. Substantial changes have been made to this regulation over the years, but investment restrictions are nothing new as traditional pension funds have been subject to them since the sixties. This is achieved by ensuring that funds are diversified by defining acceptable asset classes, and by limiting the percentage of funds allocated to each asset. You may have seen that asset managers classify some of their multi-asset unit trust funds as being Regulation 28 compliant. Regulation 28 of the Pension Funds Act limits how you can invest pension monies by very simply limiting equities to 75%, listed property to 25% and offshore exposure to 30%. Natasha Archary. R.98 in Government Gazette 162 of 26 January 1962, as set out in the Schedule. Subregulation (1) of Regulation 28 is hereby amended by— Regulation 28. This Act may be cited as the Pension Scheme Regulation Act. 126 2013 AMENDMENT OF LONG-TERM INSURANCE REGULATIONS: LONG-TERM INSURANCE ACT, 1998 Under section 72 of the Long-term Insurance Act, 1998 (Act No. Funds must comply with the limits set out in the revised Regulation 28. Previously, the limits enforced on more complex investments were very restrictive. PENSION FUNDS ACT [Updated to 22 August 2017] Act 24 of 1956 (GoN 839, G. 5679), ... regulation and dissolution of pension funds and for matters incidental thereto. The rule limits money managers’ allocation of retirement savings to certain asset classes including equities, property and foreign assets. On 23 February 2018 the Minister of Finance, Pravin Gordhan, announced changes to Regulation 28 of the Pension Funds Act. 81 of 1957 [with effect from 9 July, 1957] Finance Act, No. Today up to 10% of total funds may be either be invested in hedge funds or private equity. 5 of 1998), after consultation with Regulation 28, issued in terms of section 36(1)(bB) of the Pension Funds Act, reduces excessive and concentration risk to member savings and ensures protection by limiting the extent to which retirement funds may invest in a particular asset or in particular asset classes. The rule was, however, not introduced to simply force investors from one financial scenario into another - it aims to protect a wider spread of shareholders in both bull and bear markets. 2.4 Regulation 28. According to this amendment, the aim of this regulation is to "ensure that the savings South Africans contribute towards their retirement is invested in a prudent manner that not only protects the retirement fund member, but is channeled in ways that … The impact of Regulation 28 on returns Have investors been missing out? Over and above the benefits of prudent asset allocation encouraged by the regulation, RAs continue to offer tax-efficient and thus cost-effective alternative retirement savings solutions for the self-employed, the irregular earners and those wishing to supplement their standard retirement plans. These regulations aim to protect investors from poorly – or worse, recklessly – managed retirement fund portfolios. The Prudential Assurance Company is a direct subsidiary of M&G plc, a company incorporated in the United Kingdom. 1 January 1958 (Government Gazette 5971 of 8 November 1957) Amendments. 24 OF 1956 [View Regulation] [ASSENTED TO 28 APRIL, 1956] [DATE OF COMMENCEMENT: 1 JANUARY, 1958] (English text signed by the Governor-General) This Act has been updated to Government Gazette 37351 dated 18 February, 2014. as amended by Finance Act, No. 127 Amendment of regulations for pension funds: Pension Funds Act, 1956 ..... 8 _____ Government Notices MINISTRY OF FINANCE No. Presentation on Final Reg 28 as Gazetted (1,192kb) Final Regulation 28 made under Section 36 of the Pension Funds Act, 1956 (1,197kb) Explanatory Memo to Final Regulation 28 (771kb) Matrix of Comments received on 2 December 2010 draft regulation (3,527kb) imposed certain restrictions or constraints on pension funds under direct control of trustees. The National Treasury has called on the public to comment on the draft amendments to Regulation 28 of the Pension Funds Act. Prudential Investment Managers South Africa (Pty) Ltd is a licensed financial services provider.

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