Public sector pension funds under the spotlight

public sector pension funds
15 Mar 2024

Proposed amendments to various pieces of legislation governing public sector pension funds have been drawn up.

In a statement, national treasury confirmed that the “amendments provide the necessary legislative amendments required to effectively implement the two-pot retirement system changes in public sector funds”.

Treasury added that the amendments relate to the Government Employees Pension Law of 1996; Post and Telecommunications-related Matters Act of 1958; and Transnet Pension Fund Act of 1990.

The proposed amendments insert certain definitions to provide for the introduction of the savings withdrawal benefit; provide for the appropriate account of a member’s interest in the savings, retirement, and vested components and provide for deductions that may be made by the funds.

“These amendments seek to align pension laws across all sectors to ensure that pension funds can amend the fund rules and implement the two-pot retirement system on the effective date of 1 September 2024.”

Treasury confirmed that the amendments to the public sector pension laws will be proposed for inclusion in the Pension Funds Amendment Bill currently under consideration by the standing committee on finance.

The bill was tabled in parliament at the end of January 2024.

Treasury published the bill’s explanatory summary in Government Gazette 49558 in October 2023.

Cabinet approved the bill in November 2023 for tabling in parliament.

The bill proposes amendments to the Pension Funds Act of 1956 to provide for the implementation of the first phase of the “two pot” retirement system.

The “two pot” retirement system will enable the restructuring of retirement contributions into two pots.

The one retirement fund account can be accessed at any time and the other account will not be accessible before retirement and must therefore be preserved until retirement.

It is proposed that one-third of any future contributions should go into the accessible retirement fund account and the other two-thirds goes into an account that must be preserved until retirement.

The bill aims to amend the Pension Funds Act, 1956, so as to:

  • insert certain definitions in order to provide for the introduction of the savings withdrawal benefit;
  • provide for the appropriate account of a member’s interest in the savings, retirement and vested components;
  • provide for deductions that may be made; and
  • provide for matters connected therewith.

Public hearings on the bill were held on 12 March 2024.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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