What's in a name?

GIB has important news for you regarding the Destiny Umbrella Provident Fund which we are sure you will find interesting. Quite simply, we have changed the name to the Destiny Umbrella Retirement Fund.

Surely you will now be asking yourself why this simple name change should be interesting, so the purpose of this communication is to give some idea of the changes in legislation and regulation which has led to this name change and how it affects your situation as a member of the Destiny Umbrella Provident Fund.

On 1 March this year changes to the Income Tax Act compelled all Provident Funds which had the approval of the Revenue Authorities at that date to cease being purely vehicles providing cash at retirement. Instead, from 1st March all provident funds had to provide a mixture of cash and pension when a member retires from the fund.

This change will have a profound effect on how members will consider their retirement benefits, and planning for retirement, since they will have to understand changes to the Income Tax Act and how the Destiny Umbrella Retirement Fund will provide and administer your benefits from 1st March this year.

As previously communicated in our February 2021 newsletter entitled “T-Day Annuitisation is here”, we advised that from 1st March all your contributions to the Fund, and those of your employer, will be invested to provide you with a pension at retirement. At retirement, member and employer contributions towards pension will be utilised to provide you with a pension income and you will have the option of exchanging up to one third of the value of your pension for cash.

BUT what about my provident fund benefit at the end of February 2021 we hear you say. Yes, that is an important part of your retirement benefit because you will have a full VESTING RIGHT to that benefit in cash when you retire. So, changes to Income Tax legislation means that when you retire you will have a mix of cash and pension income to sustain you in your senior years.

What we have described goes for the majority of members of the Fund but if you are aged 55 and over on 1st March 2021 your contributions and those of your employer will continue to be paid to the Fund and your membership will continue on a pure provident fund basis. This means that when you get to retirement you will be able to take your full retirement credit as cash (after tax). In other words, there will be no compulsory requirement that your benefit is a mix of cash and pension. It must be made clear however that if you exit the Destiny Umbrella Retirement Fund and move to another fund this provision, or concession, falls away and you will join the new fund on the basis of paying contributions towards a pension at retirement.

As a result of the Destiny Fund now being fully registered and approved by the Financial Authorities which provides a mix of pensions and cash at retirement it is inappropriate to call the Fund a provident fund so a decision has been taken by the Trustees to call it a Retirement Fund which is now much more appropriate in the circumstances.

The effect of legislation governing what we have described above has led the Trustees of the Retirement Fund to give serious thought to the future of the Fund and how legislation can assist with enhancing the operation of the Fund for the benefit of members. Since the Fund now provides pension benefits on an ongoing basis from 1st March 2021, it follows that it is a pension fund as well as a provident fund and hence members of the Destiny Umbrella Pension Fund can now be integrated with members of the Retirement Fund creating just one contributory umbrella retirement fund arrangement. The advantages of this change will lead to a more straightforward administrative basis for GIB and will reduce ongoing operating costs since there will be only one retirement vehicle taking into account all administrative and regulatory costs. This will enable the Trustees and GIB to investigate in a much simpler fashion how the Fund can be enhanced further for the benefit of members.

To find out more about T-Day Annuitisation click here:

T-Day Annuitisation is here - Effective 1 March 2021 | GIB Insurance Brokers