What can we learn from the past?
The Registrar of Pension Funds 59th Annual Report for the 2017 calendar year was published on 18 December 2018. Besides the industry statistical overview, performance of funds and financial statements, the report covers proposed regulatory changes, litigation matters, unclaimed benefits and the outcomes of on-site visits
Amendments to the Pension Funds Act
The report highlights the submissions that have been made to National Treasury for amendments to the Pension Funds Act.
As a result of several enquiries on the application of the Default Regulations by retirement funds, the FSCA recently released a guidance notice. Click here to read our recent article on the application of the default regulations by retirement funds.
BusinessTech also recently summarised the new regulations and referred to the changes as effectively introducing ‘three key pillars’ to the Act.
- The default investment portfolio;
- Default preservation and portability;
- An annuity strategy.
Conduct supervision matters
During 2017, the Registrar took a more proactive, intrusive, and intensive approach in assessing the conduct of trustees and administrators. Acting under section 25 of the Pension Funds Act and following the Retirement Funds Division’s risk-based supervisory plan, the department conducted 162 on-site visits on funds and administrators. Significant supervisory issues were identified during these on-site visits in respect of the following:
- Boards not properly constituted in terms of section 7A of the Act and/or fund rules.
- Administrators not adhering to their responsibilities as outlined in the administration agreement. Delegations are not properly formulated, signed or do not exist in respect of responsibilities delegated to sub-committees and/or service providers.
- Failure by boards to monitor compliance with provisions of the Pension Funds Act, specifically section 13A of the Act and Regulation 33.
- Expenses and remuneration of board members are very high.
- Remunerating board members for services despite fund rules not providing for such remuneration.
- Failure of boards to timeously reapply for section 7B exemptions prior to the expiry of the exemption.
- Failure of boards to submit annual financial statements and valuation reports on time.
- Delays or failures by Boards in distributing annual benefit statements to members.
The latest Annual Report of the Registrar of Pension Funds further states that approximately forty four billion Rand in unclaimed benefits is owed to about 4.4 million beneficiaries.
It is reported that since the implementation of the unclaimed benefits search engine, 7 980 possible matches have been identified with asset value amounting to approximately R1.9 billion.
The Retirement Funds Division implemented an unclaimed retirement benefit search engine to enable members of the public to establish if there are possible unclaimed retirement fund benefits due to them from any fund to which they were previously members or to beneficiaries of members which remained unclaimed since the member passed away.
The number of appeals made against the Registrar’s decisions during the 2017 review period decreased from the previous year. Nine new appeals were received in the 2017 reporting period, compared to 17 in the previous period. The registrar does not anticipate that appeals to the Financial Services Tribunal in the new Authority will be significantly different to current trends.
The published Financial Services Tribunal decisions since the introduction of the new Authority can be accessed on the FSCA website.
Click here to download the Registrar of Pension Funds Annual Report.