The Financial Sector Conduct Authority (FSCA) has issued changes to the requirements for contributions, contribution statements and reporting around contributions. The purpose of the changes – reflected in the FSCA Conduct Standard 1 of 2022, is to standardise the manner and format of reporting by Funds in respect of all contribution related matters.
To this end, Sanlam is required to inform our clients of the changes, and the impact it has on participating employers, as all employers are required to provide Sanlam with a new set of requirements. We have listed these changes below.
What are the changes reflected in the FSCA Conduct Standards 1 of 2022?
The FSCA Conduct Standard requirements are summarised as follows:
- It stipulates the minimum information that employers have to provide in terms of section 13A of the Pension Fund Act to all Administrators / Retirement Funds.
- It obliges Funds to report employers that contravene or do not comply with sections 13A(2)(b) or 13A(3)(a) of the Pension Funds Act.
- It stipulates the rate of interest payable on late or unpaid contributions.
What is the effective date of these changes?
The earliest effective date of the Conduct Standard is six months after the date of publication, i.e., 19 February 2023 or at a later date indicated by the FSCA. This means that all contribution schedules submitted to Sanlam as the administrator in respect of contributions payable for the month of February 2023 and onwards, must comply with the new act.
What is required from Participating Employers?
- Provide all requirements on a monthly basis.
- Ensure that all eligible employees appear on the employer contribution statement.
- As part of the monthly contribution statement submission, ensure that all eligible employees are accurately reflected on the statement as members of the Fund.
What is required by the Fund and Administrator?
The Conduct Standard requires the Fund to notify every employer before the take-on date and annually thereafter of their duties, obligations, and liabilities under Section 13A of the Pension Fund Act. This must be done in a prescribed format.
What is the new set of data requirements?
| Name of the Fund | Name of the Employer |
|---|---|
| Fund Registration Number | Address of the Employer |
| Percentage and amount of contributions | Employers pay or industry number |
| Split between member and employer contributions | Where an employer has multiple pay-points, the pay-point which made the deduction |
| Details of any additional voluntary contributions paid | The contact person responsible at the employer or pay-point dealing with enquiries relating to contribution statements and payment of contributions |
| The period in respect of which the contribution is payable | All information provided must be accompanied by a declaration by the employer that all employees eligible to be members of the Fund are accurately reflected in the minimum information. |
| Date of membership (joining the fund) | The identity of the person envisaged in section 13A (8) of the Act, as requested from the employer by the Fund in terms of section 13A(9)(a) The Person is Defined as: Head of finance (CFO) at the company that pays/approves payment/takes ultimate responsibility for the payment of financial obligations (which includes the obligation to pay contributions to the fund). |
| The membership number allocated to each member by the fund | |
| Indication of any changes compared to the contribution statement for previous periods. | |
| Member Information | |
|---|---|
| Full name | Annual pensionable salary |
| Date of birth | Income tax number |
| SA identity number or passport number | Contact number (where available) |
| Residential address | Email address (where available) |
| Postal Address |
How to submit the data to Sanlam?
Employers can currently submit their monthly contribution data using Sanlam’s online contribution process or do so manually using a dedicated email address.
Clients using Sanlam’s online contribution process:
We are aware of the strain these new requirements may impose on an employer. To alleviate the strain, we have initiated changes in respect of Sanlam’s online contribution process. This means that employers who use our online contribution process will be able to submit the data without any hassles.
A bit more about our online contribution processes?
Sanlam’s electronic contribution process offers employers a quick and easy way of updating monthly member data and paying their monthly contributions.
Positive feedback received from our clients indicates the benefits of using the online system:
How to submit the data to Sanlam if you are not using our online contribution process?
All these requirements must be met, and it would be helpful for employers to start collecting employee information monthly and uploading it online. We urge employers to please liaise with their dedicated Client Relations Manager, and to strongly consider making use of our online contribution process, instead of the current manual contribution process.
While employers engage with their Client Relations Manager to discuss the transition to Sanlam’s online contribution process, they must continue to follow the normal manual contribution process and submit all contribution schedules via our dedicated inbox; SanlamEB@sanlam.co.za. Special reference must be made to the subject line of these emails (i.e., Contribution schedule: MGcode mmyy) to include the new data requirements as stipulated above. To avoid any delays in processing the contributions, the contributions paid into the Fund’s bank account should match the total contributions on the schedules at all times. It is crucial that employers adhere to the required timelines to avoid late interest payments.
Employers are also encouraged to use our online contribution schedules known as a pre-bill. These schedules are prepopulated with member’s data and contributions and are available online. These pre-bills will also be amended to include all the requirements mentioned above.
What is the commencement date?
From the end of February 2023, all contributions payable must comply with the new data requirements regardless of whether they are sent manually or uploaded via our online contribution process.
Late payment interest
The conduct standard sets the interest rate for arrear contributions at prime plus 2%. The amended wording makes it clear that funds do not have any discretion in this regard. According to the FSCA, the standard’s provisions on late payment interest will replace Government Notice 397 of 12 May 2010.
In keeping with section 103(5) of the National Credit Act, the interest on unpaid amounts may not exceed the principal debt (inclusive of the costs associated with the recovery of the unpaid amounts).
What will happen if the Employer does not comply?
The FSCA Conduct Standards is law, all employers must comply. Trustees must report employers that do not comply for 90 consecutive days with sections 13A(2)(b) or 13A(3)(a) of the Pension Funds Act, to the SA Police Service (SAPS).
Further requirements
- The administrator must within 15 days after the minimum information (the contribution statement) was due, report to the Principal Officer or monitoring person regarding compliance with section 13A. The report must include details on previously unresolved matters and where the minimum information and actual contributions do not reconcile (unless the discrepancy is less than 2.5% of total contribution payable).
- The Principal Officer or monitoring person must within 7 days of the report in (1), report to the board regarding the compliance with 13A.
- The board must then ensure that any contravention is brought to the personal attention of each member, in writing. Where members cannot be identified, it must be brought to the attention of all the members of the Fund or all members of the specific participating employer within 30 days of the report in (2).
- The board must within 30 days of the report in (2), report the proposed course of action to remedy the contravention to the FSCA in the format as prescribed by the FSCA.
- Any material contravention that continues for 90 days, must be reported within 14 days after the 90 day-period, to the SAPS in the format as prescribed. This continued contravention must be brought to the attention of the affected members, in writing, within 14 days after the expiration of the 90 days period.
- Compound interest on late or unpaid amounts is prescribed at prime rate plus 2 and may not exceed the principal debt due in respect of the unpaid amounts, inclusive of all costs in recovering the unpaid amounts. The current prescribed late payment interest rate will be repealed.
- Interest shall constitute investment income for the Fund and is payable by no later than the end of the second month following the month in respect of which the amount is received, or the value is transferrable.
- Where the recovery of arrear contributions is outsourced to an attorney, the board must have regard to and avoid possible conflict of interest. Fees must be reasonable and may not impede the delivery of fair outcomes to members and the fund. The board must enter into an agreement to ensure that the recovered amounts must be paid into the fund’s bank account within 7 working days of receiving such amount. The agreement must also include the fee structure, the steps to be taken if the employer fails to pay, anticipated timelines and the frequency of reporting to the fund.
Who to contact:
Should you require further clarity regarding this matter, kindly contact your dedicated Client Relations Manager who will assist you further.