Pension Funds Act, 1956 (Act No 24 of 1956)

Regulations

Part VII : General

37. Default investment portfolio(s)
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(1)The board of a fund with a defined contribution category, to which members belong as a condition of employment, must include in its investment policy statement the provision of one or more default investment portfolios.

 

(2)The board must ensure, and be able to demonstrate to the Registrar on request, that—

 

Default investment portfolio(s) are appropriate for the members who will be automatically enrolled into them

(a)the design of the default investment portfolio, including its—
(i)objective;
(ii)underlying asset allocation;
(iii)fees and charges; and
(iv)the expected risks and returns to which it exposes members whose retirement savings in that fund are or will be invested in the default investment portfolio,

is appropriate to that category of members whose retirement funding contributions and retirement savings are or will be invested in the default investment portfolio(s);

 

The composition of assets and performance of the default investment portfolio are adequately communicated to members

(b)the composition of assets and performance of the default investment portfolio(s), and fund returns are communicated to members on a frequency and format which may be prescribed;

 

Default investment portfolios are reasonably priced and competitive

(c)the fees and charges in respect of the default investment portfolio(s) or the assets held in respect of the default investment portfolio(s) are reasonable and competitive, taking account of the size, asset allocation and other characteristics of the fund;

 

All fees and charges are disclosed

(d)all fees and charges, whether borne directly or indirectly by the fund, implicit or explicit, are disclosed on a regular basis to boards and the relevant information is appropriately disclosed to members, in a clear and understandable language, and in formats which may be prescribed;

 

Both passive and active investment must be considered as investment options

(e)it considers both passive and active investment strategies as part of the default investment portfolio;

 

No loyalty bonuses or other complex fee structures

(f)no fees or charges deducted from or amounts credited to members’ retirement savings or retirement funding contributions or otherwise paid to members by any service provider in respect of the default investment portfolio may depend on the length of time that an individual has been a member of the fund, the number of contributions made by the member or any similar measure;

 

Members are not locked into the default investment portfolio

(g)where member investment choice is provided in the rules, members may, at least once every twelve (12) months, instruct the fund to transfer their retirement savings from the default investment portfolio into any other investment portfolios offered in terms of the investment policy statement, in respect of which transfer the fund may deduct reasonable administration costs; and

 

The default investment portfolio is reviewed

(h)it reviews the default investment portfolio(s) on a regular basis to ensure that it continues to comply with this regulation;

 

Exemption

 

(3)The Registrar may on written application by a fund or in general, exempt a fund, or categories, types or kinds of funds, from all or any of the provisions of these regulations, subject to conditions that the Registrar may impose.

 

[Regulation 37 inserted by regulation 2(1) of Notice No. 863 of 2017]