retirement fund industry sa - etfSA RA（退休基金行业sa - etfSA RA）.pdf

The Retirement Fund Industry in South Africa Mike Brown, Managing Director, etfSA.co.za June 2013 INTRODUCTION The venerable Pensions Fund Act 24 of 1956, subject to many Acts of Amendment and Regulatory changes over the years, governs the retirement fund industry in South Africa. There has been a significant consolidation in the retirement fund industry in South Africa over the past decade. From some 13 000 registered retirement funds in 2005, the Financial Services Board (FSB) now reports that only some 3 000 active funds are registered. In South Africa, unlike many other areas of the world, over 60% of retirement fund members are privately administered and funded. South Africa has no compulsory or national pension fund scheme, unlike many other countries. The Government, through its tax payers, funds a social security old-age grant to senior citizens, but this is only R1 260 per month. The Government does, however, provide retirement schemes for its employees, through the Government Pension Fund (GPF), the Public Investment Commissioner (PIC) and various public enterprise pension funds. For the 60% or more of the workforce in South Africa, who rely on privately provided pension schemes for retirement, the following options are available. Retirement Funded Employment (Company Pension Funds) An employer can provide a pension scheme for its workforce (these are often called occupational funds). The company providing employment will contribute to the Fund and the individual employee can contribute up to 7,5% of their retirement-funding income (which typically includes income such as travel allowances and other reimbursements). On retirement, the occupational pension fund normally pays an annuity (monthly pension) based on the contributions of the company and the employee to the Fun