Saving for retirement is often not top of mind for many people, especially those who have just started working and earning cash. Other life costs and expenses seem to be more important, but the fact of the matter is that it’s certainly recommended to start saving as soon as possible. What’s more, it’s important to stay in the know about any laws that might affect your savings.
As of 1 September 2017, trustee boards of retirement funds will be compelled to implement an in-fund preservation procedure for members who decide to quit their jobs before retirement.
Additionally, the trustee boards will also be required to make provision for a default investment portfolio to contributing members who don’t necessarily have a choice regarding how their savings should be invested.
Simply put, this means that consumers will be protected because the new laws allow anyone who is a retirement fund member to keep their retirement savings invested and growing if they leave their job.
To further help people retire comfortably, the investment portfolios will be affordable and offer good value for money. Regarding the default preservation funds, resigning workers will be able to leave their accumulated savings in the particular fund, which was previously not allowed.
Furthermore, the new regulations call for an annuity strategy to be put in place, either in-fund or out-of-fund and can only “default” retiring members into a particular annuity product after a member has made a choice.
Of course, it will be well within the employee’s right to withdraw savings or be able to transfer funds upon request. But workers will be required to attend retirement benefit counselling before making any decisions related to withdrawing funds. The default preservation regulation does not apply to retirement annuity and preservation funds.
The National Treasury has made it clear that the new regulations will be closely monitored and reviewed to ensure that members are fully protected.