Regulation 28 of Pension Fund Act conforming to Shari'ah requirements

Randeree, Ghulaam Mustafa Goolam Mohiyoodeen (2008-12)

Thesis (MBA (Business Management))--Stellenbosch University, 2008.


ENGLISH ABSTRACT: The South African retirement fund industry, financially sound and well regulated includes a private savings sector and government employees provided for with a near fully-funded retirement arrangement, but approximately three-quarters of the population reach retirement without adequate savings and are dependent on a government social assistance grant programme. One of the broad objectives of government retirement policy is to encourage individuals to provide adequately for their retirement needs and that of their dependents. The retirement funding system has been codified in the Pension Funds Act of 1956. The only investment guidelines that trustees of retirement funds had to follow was Regulation 28 of the Pension Funds Act, which prescribed maximum limits for investments of funds in the various asset classes but provided very little guidance on appropriate investment strategies. The new draft Regulation 28 compels trustees to draw up carefully considered investment strategies. The South Africa Muslim population, though two percent in number has a significant impact on the economy. This report investigates how Regulation 28 collectively with the new draft regulation can be modified to comply with the tenets of the Muslim faith i.e. Shari'ah (Islamic law) requirements. Perhaps the most significant distinction is investment in equity instruments are the main avenue available to Muslim investors for wealth creation, as Islamic law forbids interest. Islamic Commercial Law differs from conventional Western Finance, the most significant difference being the prohibition of riba (interest), commonly equated to interest in conventional finance. However, there are Muslim scholars and thinkers who are not convinced about equating interest with riba with some challenging the riba interest equation.

AFRIKAANSE OPSOMMING: Die finansieel sterk en goed gereguleerde Suid-Afrikaanse Aftreefondsindustrie sluit 'n privaat spaarsektor in en voorsien aan staatsdienswerknemers 'n aftreeplan wat byna ten volle befonds word. Ongeveer twee derdes van die populasie bereik egter aftrede sonder voldoende fondse en is van die regering se Sosiale Bystandsfondsprogram afhanklik. Een van die bree doelwitte van die regering se aftreefondsbeleid is om individue aan te moedig om voldoende aan hulle en hulle afhanklikes se afreebehoeftes te voorsien. Die aftreefondstelsel is in die Pensioenfondswet van 1956 gekodifiseer. Die enigste beleggingsriglyne wat deur trustees van afreefondse gevolg moes word is Regulasie 28 van die Pensioenfondswet. Hierdie riglyne het maksimum limiete vir die belegging van fondse in verskillende bate kategoriee voargeskryf, maar het baie min leiding ten opsigte van die geskikte beleggingstrategiee voorsien. Die nuwe Regulasie 28 konsep verplig trustees am weldeurdagte beleggingstrategiee op te stel. Die Suid-Afrikaanse Moslem populasie, alhoewel net 2% van die totale populasie, het 'n beduidende impak op die ekonomie. Hierdie verslag ondersoek hoe Regulasie 28 in samewerking met die nuwe Regulasie 28 konsep verander kan word am aan die Moslem geloofsleerstellings, bv. Shari'ah (Islam wet) se vereistes te voldoen.

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