Update on the rationalisation of retirement funds

There has been much speculation around the rationalisation of retirement funds and the possible commencement date of the much-anticipated freedom of association (window period).

On the 7th of December 2017, the bargaining council (SALGBC) had a meeting on the rationalisation of retirement funds, where various grey areas in the facilitator’s proposal were identified. An instruction was given to the facilitator to address these grey areas and the revised proposal was submitted to the SALGBC on the 22nd of January 2018. This revised proposal, which also includes changes proposed by the NFMW, is currently being reviewed by the parties to the bargaining council and feedback is awaited. No final decisions have been taken by the SALGBC and the relevant parties concerning the rationalisation of retirement funds.

In terms of the proposal, funds who are not accredited, will no longer be made available to newly appointed employees. These funds will, however, still retain their assets, continue to be managed and to earn returns on all investments. The NFMW is the largest fund within local government in terms of membership, with more than 47 000 members and will meet the criteria as set out by the bargaining council. Members of the NFMW therefore have no need for concern regarding the continued existence of the fund and can rest assured that we will do everything in our power to protect their best interests.

Part of the SALGBC's suggestions is that members be given the choice to transfer their membership and fund values to a fund of their choice. Such transfers between funds can, however, only take place by collective agreement, in terms of regulatory legislation and only if the members agree. The NFMW (a fund with assets of more than R15 billion) will, according to legal provisions and good corporate governance, continue to responsibly invest for the benefit of members and their beneficiaries. At this stage, it seems as if the earliest possible commencement date of the freedom of association period will be 1 July 2019.

As always, we undertake to notify members if there are any further developments in the matter.

Kind regards
Sean Samons
Principal Executive Officer