Regulation 39: boards versus financial advisers in providing financial advice
Regulation 39 will help a member to understand available annuity strategy options, but does not intend to offer financial advice needed to ensure they fully understand all relevant factors
Three new pension regulations, colloquially dubbed “the default regulations”, came into effect on March 1. Regulation 39 specifically provides for retirement funds to establish an annuity strategy. It requires all pension, pension preservation and retirement annuity funds, unless exempted, to have a strategy giving members the opportunity to elect a retirement income solution tailor-made to their needs. Provident funds and provident preservation funds are excluded from complying with this regulation unless their rules allow a member to elect an annuity. The regulation aims to provide cost-effective, suitable annuities to protect members at retirement or in the de-accumulation phase. Before the implementation of Regulation 39, boards of funds did not necessarily take an active role in protecting a member’s retirement benefit. In effect, members who were entitled to an outsourced annuity of their choice, depending on the rules, would need financial advice to ensure the correct product...
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