Directive on Prohibition of Corruption in Pension Schemes

Directive PF No 8, issued on 8 March 2018, provides guidelines on how the Registrar intends to combat and prevent corruption and corrupt activities. Titled “Prohibition on the acceptance of gratification”, the document prescribes requirements affecting principal officers, deputy principal officers, board members, employees of retirement funds, valuators, auditors, administrators, employees of administrators or other officers or other service providers to retirement funds including investment managers and investment advisors.

Gratification is defined as:

  1. money, whether in cash or otherwise;
  2. any donation, gift, loan, fee, reward, valuable security, property or interest in property of any description, whether movable or immovable, or any other similar advantage;
  3. the avoidance of a loss, liability, penalty, forfeiture, punishment or other disadvantage;
  4. any office, status, honour, employment, contract of employment or services, any agreement to give employment or render services in any capacity and residential or holiday accommodation;
  5. any payment, release, discharge or liquidation of any loan, obligation or other liability, whether in whole or in part;
  6. any forbearance to demand any money or money’s worth or valuable thing;
  7. any other service or favour or advantage of any description, including protection from any penalty or disability incurred or apprehended or from any action or proceedings of a disciplinary, civil or criminal nature, whether or not already instituted, and includes the exercise or the forbearance from the exercise of any right or any official power or duty;
  8. any right or privilege;
  9. any real or pretended aid, vote, consent, influence or abstention from voting; or
  10. any valuable consideration or benefit of any kind, including any discount, commission, rebate, bonus, deduction or percentage,
    but excludes remuneration paid by a sponsor of a retirement fund to a board member appointed by the sponsor of a retirement fund.

Specific types of gratification not permitted

  1. any gratification which objectively viewed, creates a conflict of interest with their fiduciary duty towards the fund;
  2. token gift/s that exceed/s the annual limit set by the board in terms of the fund’s gift policy, which annual limit shall not be more than R500.00 per annum in aggregate from any one service provider;
  3. gratification relating to local or international due diligences including, but not limited to, subsistence, travel or accommodation;
  4. any gratification relating to local or international entertainment or sporting events including, but not limited to, subsistence, travel or accommodation or
  5. conferencing costs or board of fund expenses.

Duty to report

Board members, principal officers, deputy principal officers, employees of retirement funds, auditors, valuators, administrators, employees of administrators and service providers to retirement funds are directed to report or disclose to the Registrar any breach or attempted breach of this directive immediately upon becoming aware of same and are referred to Information Circular 1 of 2018 for guidance on how to report or to make a disclosure to the Registrar.

Further clarification on the effective date of Directive PF no 8

As a result of queries received, the following should be noted:

  1. The Directive is effective from 8 March 2018.
  2. Commitments which were entered into prior to 8 March 2018 and which are prohibited by the Directive should be withdrawn or declined by the regulated persons or entities, where possible.
  3. If it is not possible to withdraw or decline such prior-commitments, the regulated persons or entities can honour such prior-commitments. This should not be interpreted as the FSB endorsing the prohibited action, but should be seen within the context of the effective date being 8 March 2018.

If this last point makes any sense to you, please enlighten me?

Click here to read Directive PF no 08.

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