Regulatory Alerts2024-08-14
FSCA Communication 27 of 2024: Two-Component System for Defined Benefit Funds
The Financial Sector Conduct Authority (FSCA) establishes best practice for applying the two-component system to defined benefit retirement funds following the June 2024 Revenue Laws Amendment Act. Funds must allocate contributions into retirement and savings components based on two-thirds and one-third of pensionable service, respectively, while retaining the option to use FSCA-approved alternative allocation methods. The communication mandates specific actuarial principles for converting lump-sum savings withdrawals into reduced pensionable service, ensuring financial neutrality and transparent communication to members.
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