South Africa: When the liquidation of a retirement fund becomes inevitable

In the Pension Funds Act, this termination of a retirement fund is referred to as a liquidation of the fund. The word liquidation commonly refers to an entity in financial distress or bankruptcy, but this is not the case with the liquidation of a retirement fund. Such a liquidation is merely the formal process of distributing the fund’s assets to all stakeholders in a fair and equitable way.

The various stakeholders involved in the termination of a retirement fund should be acutely aware of their rights and responsibilities during this process. The liquidator should manage and communicate the process clearly to avoid unrealistic demands and general levels of frustration during the liquidation process.

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