The Financial Sector Conduct Authority (FSCA) on 15 February 2022 advised that a draft Conduct Standard on the payment of retirement fund contributions, together with supporting documentation, was submitted to Parliament on 8 December 2021. This is required in terms of section 103(1) of the Financial Sector Regulation Act, which requires that, before it is issued, any regulatory instrument must be submitted to Parliament for a period of at least 30 days while Parliament is in session. The final Conduct Standard will therefore probably be issued shortly.
The requirements relating to the payment of retirement fund contributions are currently contained in regulation 33 of the regulations under the Pension Funds Act (“the Act”). The draft Conduct Standard is intended to replace regulation 33 (with necessary drafting improvements) by providing for the following matters that are currently provided for in regulation 33:
- the minimum information to be furnished to a fund by an employer, with regard to payment of contributions by an employer, in terms of section 13A of the Act;
- notification and reporting obligations on the board of a fund, principal officer or other authorised person, where there is a contravention of, or non-compliance with, section 13A of the Act by an employer; and
- the rate of interest payable on arrear contributions.
In addition, the draft Conduct Standard also proposes to:
- set a standard format in which a fund must inform a participating employer of its duties and obligations under section 13A of the Act;
- set out the format in which a fund must request an employer to notify it of the identity of every director who is regularly involved in the management of the employer’s financial affairs;
- prescribe the manner and format of reporting by principal officers of retirement funds, or any other authorised persons as referred to in section 13A(6) of the Act, to the board of a fund regarding compliance with, or non-compliance with, the provisions of section 13A of the Act by an employer;
- impose standard notification and reporting obligations on the board of a fund where there is a contravention of, or non-compliance with, section 13A of the Act by an employer; and
- set requirements for a board of a fund, and participating employers, when the board of a fund outsources the collection of outstanding contributions to attorneys.
The Conduct Standard also requires that “any material contravention of or material failure to comply with sections 13A(2)(b) or 13A(3)(a) of the Act that continues for a period of 90 days, must be reported in sufficient detail by the board to the South African Police Service, in the format determined by the Authority, within 14 days after the expiration of the 90 day period”. In response to comments that the Police does not have the capacity to deal with such complaints, the FSCA said the following:
“Although the FSCA acknowledges that there have been practical and capacity challenges, such should not serve as basis for not having this as a requirement. This requirement is still important, even if it just serves as a mechanism to deter undesirable behaviour whilst the practicalities are being addressed. It might also be noted that the FSCA is in the process of liaising with the SAPS to see to what extent the process can be improved.”
With regard to the implementation date of the Conduct Standard, the following is said in the Statement supporting the Conduct Standard:
“The implementation date of the Conduct Standard is 6 months after publication, or a later date determined by the Authority. If implementation becomes a widespread problem across the industry as a whole because the 6-month period is insufficient, the FSCA would therefore be able to extend the implementation period to a later date.”
This newsletter provides information of a general nature and does not constitute advice in respect of a particular client.