BUSINESS NEWS - Pension funds and their administrators are racing against time to implement highly complex changes to their rules before South Africa’s pension fund reforms come into effect on 1 September this year, instead of 1 March 2025 as originally planned.
A major concern is the lack of final legislation which means some 3 000 retirement funds will have to amend their rules without knowing whether there will again be changes once the final bill is passed.
“There are still a lot of uncertainty and there is only about six months within which all the processes must be set in place,” says Joon Chong, tax partner at Webber Wentzel.
“We need the legislation to be tabled to parliament, voted on and passed so that it can be published and made into law. We need that really soon.”
It can be done, and hopefully it will be done smoothly, she adds.
Nicci van Vuuren, senior associate at Webber Wentzel, says pension funds still need to communicate all the changes to members, who have to understand what the changes mean for their retirement.
“The problem is you cannot educate someone if you do not know what the final legislation says,” says Van Vuuren.
“Even if there is an overall understanding … there [are] still a lot of little nuances that need to be finalised. We still do not have a date when the final legislation will be promulgated and parliament only starts on 2 February.”
Jenny Klein, principal associate at ENSafrica, says there are two competing objectives. Some people have a desperate need to access their retirement savings, in particular, because of the Covid-19 pandemic.
On the other hand, the industry wanted to have sufficient time to implement these extensive changes. It is important to get it done correctly to avoid chaos when millions of members want to withdraw, and the systems are not in place, she says.
