The rise of umbrella funds

● The number of employees who belong to umbrella funds serving multiple employers rather than standalone retirement funds that serve a single employer is rising steadily.

Between 2012 to 2016, the number of standalone retirement funds has fallen from more than 2 300 to around 1 100, while the number of umbrella funds has increased from more than 350 to almost 450, says Old Mutual.

Hugh Hacking, Old Mutual’s general manager of operations, says over the past two years commercial umbrella funds have had a 28% increase in the number of members who belong to these funds (from 1.9 million to

2.43 million) and a 47% increase in the assets under administration (from R253-billion to R374-billion).

More employers are expected to choose umbrella funds ahead of March 1, the effective date for regulations under the Pensions Funds Act, which requires funds to have default pension, investment and preservation options in place.