Implementation of individual investment choice in a public service defined contribution pension fund
Date
2014-03-26
Authors
Robinson, Colleen Heather
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Abstract
This report focuses on trends which have occurred internationally and nationally within
the retirement fund arena. Various forms of funds i.e. defined benefit (DB) or defined
contribution (DC), as well as the possibility of the implementation of individual member
investment choice (MIC), are explored within private, parastatal and public sector funds.
Case studies are used to illustrate the problems, successes and failures experienced with
the conversion process and implementation of MIC. All of the above areas were
analysed in order to propose an optimal solution for public sector retirement funding
within South Africa.
The report concludes that a dual approach is required. It is proposed, that the Government
Employees’ Pension Fund remain a DB fund in the short to medium term, while various
forms of modernization occur in order to bring the fund in line with the requirements of
the Pension Funds Act as well as to reduce the financial burden on. the State. For local
government retirement funding, the evidence is inconclusive and an optimal solution can
therefore not be proposed at this stage. Recommendations are however made as to the
process to be followed in order to introduce a sense of urgency into the matter of
finalizing the debate on the optimal future state for local government retirement funding.