LEGAL UPDATE ISSUE 09

Financial Services Laws General Amendment Bill, 2013

Background
• First draft released in March 2011 for comment by 2 May 2012.
• Second draft released early 2013; not clear if third draft will be released for comment.

Fund management, governance and operation
• Trustees to attain ‘prescribed’ level of skills and training within 6 months of appointment (Section 7A(3)).
• Court can relieve a Trustee from liability if they acted “independently, honestly or reasonably”. • Whistle-blowing responsibilities clarified for Trustees, Principal Officer, auditors, valuators and administrators.
• Rules and amendments to be submitted within 60 days of resolution.
• Section 14: no approval needed for transfer between valuation exempt fund and retirement annuities.

Non-payment of contributions
• To be re-criminalised (Section 13A).
• Funds must ensure that the employer has agreed in writing to notify the Fund of the identity of the person(s) who would be personally liable. If not:
a) all the directors of the company,
b) all the members regularly involved in the management of the CC, or
c) all persons comprising the governing body of the employer shall be personally liable for non-payment of contributions.

Enhanced power of the Registrar of Pension Funds The Registrar:
• Can intervene in the management of a Fund where the Board cannot be properly constituted (Section 26).
• Can prescribe information and intervals at which Fund information must be communicated to stakeholders (Section 32A).
• Will have enhanced powers in terms of site inspections (Section 25).

Other changes affecting benefits and surplus
• Member and employer surplus accounts and contingency reserve accounts (and sub-sections thereof) must be written into the fund’s rules.
• Minimum pension increases to be granted with effect from valuation date (no longer within 6 months of valuation date). (Section 14A(1)(d))
• Authorises payment to a third party if the member or beneficiary ‘provides sufficient proof’ that the member cannot open bank account. (Section 37A)
• Any benefit that is unpaid ‘on date that fund becomes aware of death’ will form part of distribution in terms of Section 37C and will not be transferred to the deceased estate.
• Explicit authorisation for deduction of employee’s tax due as a result of a Section 37D deduction.
• Housing loans rank above divorce order deductions, i.e. a member’s fund value will be reduced with the outstanding housing loan amount before the divorce benefit calculation is done.

* All reference to “Section” within the document refers to the Pension Funds Act.

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