METAL INDUSTRIES BENEFITS FUND ADMINISTRATORS report Background
R
etirement Funds in South Africa are governed by the Pension Funds Act No 24 of 1956 (as amended), that came into operation on 1 January 1958. Since then, all retirement Funds (Pension, Provident and Retirement Annuity Funds), must be registered in terms of this Act.
The main aims of the Pension Funds Act are to: • Register and regulate all entities operating as Retirement Funds; • Protect the rights of members; • Maintain minimum solvency standards, that employers do not renege on their commitments to employees and leave them destitute in their old age; • Ensure that the Funds, as separate legal entities, have balanced ownership and accountability of the participating parties; and • Dissolve Funds that are financially unsound or wilfully violate the Act. In terms of the Pension Funds Act, members have the right to elect 50% of the Board Members. A Trustee acts in a fiduciary capacity and should be familiar with and understand the laws governing retirement funds. The Board of Trustees has appointed as its agent, the “Metal Industries Benefit Fund Administrators” (MIBFA) to administer the funds of Employers and Employees in the metals and engineering industries. The Board is nevertheless accountable and ultimately responsible to the Registrar and the Financial Services Board. MIBFA provides administration services for the following Funds:
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SEIFSA ANNUAL REVIEW 2016
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Engineering Industries Pension Fund; Metal Industries Provident Fund; Metal and Engineering Industries Permanent Disability Scheme; and Metal and Engineering Industries Bargaining Sick Pay Fund.
A BRIEF HISTORY OF THE FUNDS THAT ARE ADMINISTERED BY MIBFA Engineering Industries Pension Fund
The “Engineering Industries Pension Fund” having been named and being the continuation of the Metal Industries Group Life and Provident Fund with which the Metal Industries Group Pension Fund was merged with effect from 1 January 1995, was first established in 1957. Until 31 March 2012 the Engineering Industries Pension Fund was a “Defined Benefit” Fund. This means that the benefits that are payable in terms of the Rules are guaranteed and are fixed in nature. The Fund bears the risk and benefits payable on retirement must be paid as a monthly income and are payable to the member for the rest of his or her life. The Board of Trustees agreed to convert the active member section of the Fund to a “Defined Contribution” Fund as from 1 April 2012. This was done in order to guarantee the long term financial sustainability of the Fund. In a “Defined Contribution” Fund, member benefits are based on the members own contributions to the Fund, plus the employer contributions, plus interest earned from investing these contributions.
The Metal Industries Provident Fund
The “Metal Industries Provident Fund”, a Defined Contribution Fund was established on 1 May 1991. In this Fund, only the contributions are defined and benefits that are payable in terms of the Rules are payable as a lump sum. There is no monthly income on retirement. The member, therefore, carries the risk and is responsible for ensuring that the member invests the lump sum wisely. On starting employment, workers can thus choose to belong to either the Engineering Industries Pension Fund or join the Metal Industries Provident Fund.
