What is prescribed assets?
Prescribed assets are the percentage of retirement funds’ assets (and possibly of other institutional investors) that, by law, have to be allocated to certain government-approved instruments.
What are prescribed assets in Zimbabwe?
Prescribed assets are bonds or securities issued by the Government, local Government, quasi-Government organisations or any other bond that may be accorded the prescribed asset status.
What is a regulation 28 fund?
Regulation 28 is issued under the Pension Fund Act. It limits the extent to which retirement funds may invest in particular assets or in particular asset classes. The main purpose is to protect the members’ retirement provision from the effects of poorly diversified investment portfolios.
Does a living annuity have to be regulation 28 compliant?
Living annuity investors are currently not subject to Regulation 28 of the Pension Funds Act, which mean that there are no prescribed investment limitations as in the case of a Retirement Annuity investment.
How many pension funds are there in Zimbabwe?
1.1 The number of registered funds in the pensions industry stood at 974 as at 31 March 2021 compared to 959 funds reported as at 31 March 2020.
Who does regulation 28 apply to?
What is the difference between a living annuity and a life annuity?
Key take-home: A life annuity is an insurance policy guaranteeing a set income payment for life whereas a living annuity is an investment held in the name of the annuitant from which an income can be drawn on a flexible basis.
How is pension calculated in Zimbabwe?
The pension is equal to 1.33% of monthly covered earnings in the month before retirement multiplied by the number of years of contributions up to 30 years, plus 1% of monthly covered earnings multiplied by the number of years of contributions exceeding 30 years.
Why is regulation 28?
Regulation 28, issued in terms of section 36(1)(bB) of the Pension Funds Act, protects retirement fund member savings by limiting the extent to which funds may invest in a particular asset or in particular asset classes, and prevents excessive concentration risk.
What is a reg 28 fund?
Regulation 28 aims to mitigate concentration risk to member savings and ensures protection by limiting the extent to which retirement funds may invest in a particular asset or in particular asset classes.
Can you withdraw from a living annuity?
You may not withdraw from your Living Annuity policy unless the value of the policy is below the legislated minimum (currently R125 000), in which case a full lump sum withdrawal may be requested. Withdrawals will be subject to income tax in accordance with the retirement fund lump sum tax tables.
What is the difference between retirement fund and pension fund?
A provident fund is a retirement fund run by the government. A pension plan is a retirement plan run by an employer. Pension funds operate much like annuities. Provident funds operate more like 401(k) or savings accounts.
What happens to a living annuity on death?
As such, the owner of a living annuity can nominate the beneficiaries to their investments and, in the event of their death, the funds remaining in the living annuity will be paid directly to their beneficiaries within a couple of days.
What is the difference between mutual funds and pension funds?
Both mutual and pension funds are investment vehicles, professionally managed, and formed by the resources invested by a set of different investors; however, while mutual funds are a channel for retail investors to participate in capital markets (their sole purpose is to profit), pension funds are designed to cover the …