PUBLIC NOTICE: GUIDANCE ON THE INTERPRETATION OF REGULATION 35(9) OF THE RETIREMENT FUNDS REGULATIONS (2017)
September 18, 2019
PUBLIC NOTICE: GUIDANCE ON THE INTERPRETATION OF REGULATION 35(9) OF THE RETIREMENT FUNDS REGULATIONS (2017)
- The Non-Bank Financial Institutions Regulatory Authority has received enquiries from members of the public and the retirement industry regarding the interpretation and application of Regulation 35(9) of the Retirement Funds Regulations (2017). The Retirement Funds Act (2014) and Retirement Funds Regulations (2017) were promulgated in April 2017 repealing the Pensions and Provident Funds Act (1987) and its Regulations. These reforms resulted in new provisions of the law, such as Regulation 35(9) of the Retirement Funds Regulations.
2. Regulation 35(9) provides that;
“A member of a preservation fund may be allowed to make a withdrawal of a maximum of 25% of the preserved benefits prior to reaching the retirement age, subject to the approval of the trustees and payment of tax where applicable after a period of 12 months membership if such member remains unemployed or if the member becomes disabled or suffers ill health.”
- The Regulatory Authority provides the following guidance;
3.1 Regulation 35(9) can only be applied to a Fund licensed as a Preservation Fund in terms of Sections 5 and 12 of the Retirement Funds Act;
3.2 To qualify for withdrawal in terms of Regulation 35(9);
- a member should have completed twelve (12) months as a member of that particular licensed Preservation Fund;
- a member should have been unemployed or become disabled or suffer from ill health;
- the maximum withdrawal is limited to twenty-five (25) percent of accrued pension benefits;
- the withdrawal is subject to the approval by the Board of Trustees; and,
- the balance of any benefits remaining after a member has made a withdrawal in terms of sub-regulation (9) shall not be available of any other withdrawal until the member’s retirement.
- The Board of Trustees must ensure proper application of Regulation 35(9) as part of their fiduciary responsibilities.
- The Board of Trustees are further required to inform or guide the pension fund members accordingly.
…………………………………………
Sriram Gade (Mr.)
DEPUTY CHIEF EXECUTIVE OFFICER- REGULATORY
