Retirement, 2005 Draft Amendments Industry Consolidated Comments SLIDO #RFcomments RETIREMENT FUNDS AMENDMENTS

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019  Part Comment (s) Proposed Change, if any   Adopted / Not Adopted   Part I, Section 2 Interpretation "dependant" The Eswatini Revenue Authority is a stakeholder and must be consulted. Leave as it was in the old legislation More clarity on the comment with regards to Eswatini Revenue Authority being a stakeholder. Comment adopted to keep the current definition of dependents to include factual dependents.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019  Part Comment (s) Proposed Change, if any   Adopted / Not Adopted   Part I, Section 2 Interpretation ‘‘defined contribution fund’’ Definition of “defined contribution fund” should refer to deduction of relevant fund expenses in determination of member value, similar to definition “fund credit” Add the words “less a proportionate share of fund expenses” to definition of “defined contribution fund” Comment adopted to include the “less a proportionate share of fund expenses”

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any   Adopted / Not Adopted   Part I, Section 2 Interpretation ‘‘fund credit’’ Definition of “fund credit” refers to “interest” being added, better to use “investment return” as used in definition of “defined contribution fund”. Change “interest” to “investment return” in definition of “fund credit”. Comment noted. Do away with the definition and propose wording in S 18(3) where fund credit is made mention of. Replace fund credit by total contribution plus investment return.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part I, Section 5 (2) (f) Licensing of umbrella funds We need to manage expectations here – the detail here cannot be in the rules Comment adopted but the intention is to clarify what the fees will be based on and what will be covered. Part II, Section 11(5) (a - c) These timelines are administrative, what if in the long run they are unworkable for all concerned parties (FSRA inclusive)? Amendments take a very long time. Further, this is an administrative burden on FSPs These timelines be included in Regulations or Directive (which also have the same effect as an Act of Parliament) but much easier to change/amend. Reference on section 11 (5) could not be located on the Bill.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019    Part Comment (s) Proposed Change, if any   Adopted / Not Adopted   Part III, Section 15 Fiduciary responsibilities of Board of Trustees d. Assess it’s performance at least once a year using criteria prescribed by the Regulatory Authority Comment noted. RF Governance, 2014 in clause 8 and 9 has provided guidance. The authority will not want to micro manage the affairs of RF. In the absence of a comment, FSRA is not able to relate what the proposed change seeks to clarify. Criteria should be set by the FSP in terms of assessment of the board of trustees.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2010 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2010  Part Comment (s) Proposed Change, if any   Adopted / Not Adopted   Part III, Section 18, Rules of a retirement fund What about loans taken against Pension? Save for as provided by section 47. Allowable deductions. Comment noted. FSRA requests more clarity on the loans taken against pension. More guidance is sought from the industry with what loans are being referred to here as this excludes the housing loans as envisaged by Section 47 of the RF Bill.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part III, Section 18(3), Rules of a retirement fund. Minimum withdrawal benefit applies only to a defined contribution fund, not a defined benefit fund It should read: “the rules of a defined contribution retirement fund shall not provide for withdrawal benefits which are less than the total fund credit of that member. Likewise, the rules of a defined benefit retirement fund shall not provide for withdrawal benefits which are less than the actuarial reserve of that member.” Comment noted. Possible housing in regulations in tranche three.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part IV, Section 26 (2) Liability of trustees, principal officers and service providers of a retirement fund Whilst we do not condone negligent and irresponsible behavior from trustees, the Proposed limits are too high and will be a deterrent to people to agreeing to serve as Trustees. WE PROPOSE MAXIMUM 5 YEARS AND E500 000.00 fine maximum instead of E2 000 000 and 10 years Comment not adopted. This is viewed as a serious offence and the maximum penalty is E2 million. This is also aligned with the FSRA Amendment Bill .

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part V, Section 29 Submission of audited financial statements and unaudited quarterly and annual returns The Timeframes are adopted as not adequate for purposes of filing especially because the information sought is now more detailed leading to perpetual requests for extensions being made particularly because the Authority may impose administrative penalties for late, incomplete or misleading returns. Therefore, adequate time is needed to ensure correctness of information considering volumes. A humble proposal for 120 days for annual returns and 45 day for quarterly returns is being made. Comment not adopted. Need to meet the requirements of the Authority. Its on the discretion of the Authority to grant extension based on the circumstances.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019  Part Comment (s) Proposed Change, if any   Adopted / Not Adopted   Part V, Section 30 Failure to submit audited financial statements and returns   The Timeframes are adopted as not adequate for purposes of filing especially because the information sought is now more detailed leading to perpetual requests for extensions being made particularly because the Authority may impose administrative penalties for late, incomplete or misleading returns. Therefore, adequate time is needed to ensure correctness of information considering volumes. We propose a reduction of the penalty to E50 000.00 and E1 000.00 per day. Comments not adopted. FSPs are requested to meet the deadlines and request extension well in advance if they anticipate problems. The intention here is to dissuade FSPs from non compliance in submitting statutory returns.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part VI, Section 33 Mergers and transfers We need to manage expectations here as well – the intention is to stop transfer of contributions during the approval processes – the reality is when contributions continue with the previous administrator you will need a second certification. The process is futile if both funds are approved by the FSRA and the transfer is in line with their rules. What about funds with exemptions on the approval of a valuator. Comment not adopted. The intention to transfer is known well in advance by the FSP and should as such be lodged with the FSRA on time. Exempted funds normally are insured funds thus they can utilize the services of the actuarial service provider of the insurer.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part VI, Section 33 Mergers and transfers In South Africa and Namibia part of the application for transfer must include copies of the communication given to members who are transferring, this communication must compare the benefits in the new and old funds. Transferring members must have been given an opportunity to lodge queries/objections in respect of the proposed transfer, all of these must be at least responded to and the regulator must be informed if there are any remaining objections Add a requirement that detailed comparisons must be provided to transferring members showing the difference between their old and new funds. Add a requirement that members must be given an opportunity to lodge queries/objections and these must at least have been sent responses. Comment noted. The funds need to conduct a due diligence process with the affairs of the members. These could be housed in a sub legislation such as the rules as opposed to the main legislation, RFA.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part VII, Section 39 Appointment and Duties of a Custodian Too much reliance and trust is put on the asset managers by the Trustees, to advise and invest and report back to them on retirement fund monies. The increase in the 50% local assets allocation has resulted in the asset managers placing the funds in addition to the conventional Government securities and listed assets, in private equity firms. There is no independent oversight here. There is a risk here. The Board (remove “may” and put “shall” appoint a custodian. Add in duties; A custodian shall hold the physical assets independently from the fund, investment manager or insurer, where the fund owns assets other than policies of insurance or units in a collective investment scheme. Comment not adopted. Clarity on the risk. Its unfair to impose on the smaller funds the appointment of custodian. What is the feeling of the smaller funds, are you in a position to appoint a custodian

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part IX, Section 47 (9) (51(9)) Claims on the Insurance and Retirement Benefit Trust Fund The time frame is short, the 50 years as prescribed by the current Act is reasonable. Fifty (50) years Comment adopted. Retain the 50 years.

RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019 INDUSTRY COMMENTS RETIREMENT FUND AMENDMENT AND ALIGNMENT BILL, 2019   Part Comment (s) Proposed Change, if any Adopted / Not Adopted   Part IX, Section 56 Apportionment of surpluses of umbrella funds This does not fully address the fact that certain surplus amounts could have arisen in respect of one participating employer sub-fund, the others should not share in such surplus i.e. one must be able to ring-fence surplus within an umbrella fund. For example, an employer could have deliberately paid in extra contributions towards costs, to meet unexpected costs in future, this should not be allocated to others Add the words: “Surplus which arose in a specific sub-section of the umbrella fund will be ring fenced and allocated to the employer and members in that sub-section”. Comment adopted. It wouldn’t be fair to share surpluses with all participating employers yet it emanated from on participating employer.

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