Services · PDF fileFinancial Services Board Slide 4 Don’t assume exemptions &...
Transcript of Services · PDF fileFinancial Services Board Slide 4 Don’t assume exemptions &...
Financial
Services
Board
RELATIONSHIPS WITH STAKEHOLDERS
Rosemary Hunter
Deputy Registrar, Pension Funds
Annual conference of the Institute for
Retirement Funds Africa, Cape Town,
July 2015
Financial
Services
Board
Slide 3
Who decides what laws
• Parliament:
Primary legislation eg amendments to the Pension Funds Act
• Ministers
• Regulations in terms of the Pension Funds Act
• Sectoral determinations in terms of the Basic Conditions of
Employment Act
• Registrar of Pension Funds
• Prescribe requirements in respect of certain matters;
• Grant exemptions “where practicalities impede the strict
application of the specific provision” – section 2(5)
• Grant extensions of time for compliance – section 33
Financial
Services
Board
Slide 4
Don’t assume exemptions &
extensions will be granted
• Exemptions
o No exemptions from obligation to give members the right to elect
board members, other than in terms of section 7B.
o Don‟t let your section 7B exemption lapse before applying for its
renewal.
• Extensions
o Don‟t let time periods for compliance to expire before applying for
extension – will only be granted in special circumstances. May still
consider main application but will impose administrative penalty for
non-compliance
Financial
Services
Board
Slide 5
Who is being represented
• Requests for exemptions and extensions often made by service
providers, usually fund administrators
• They are also those who have complained the loudest about
changes in registrar’s approach to
• the granting of exemptions and extensions;
• the governance, closure and cancellations of the registrations of
dormant and shell funds;
• the commencement and termination of employer participation in
umbrella funds.
Financial
Services
Board
Slide 6
For whose benefit are these
complaints made?
• This is understandable – particularly if they have made
arrangements to conduct business on the assumptions that past
practices would continue;
• But also not understandable – service providers and funds should
operate on the basis of legal compliance, even if non compliance has
been condoned in the past.
• Registrar’s changes designed to improve protection of members
and beneficiaries per his mandate.
Financial
Services
Board
Slide 7
Registrar as guardian
„[176] … one of the reasons why the legislature has seen fit to grant
extensive powers of supervision and control to the registrar is that the
members of pension funds often do not have the knowledge, skill or
resources to take adequate steps to protect themselves. Their right to do
so is, of course, not taken away by the PF Act, but this does not detract
from the conclusion which in my view can fairly be drawn from the
provisions of the PF Act and the FI Act, namely that the registrar fulfils an
important function as the guardian of the interests of members of pension
funds.
Financial Services Board & another v De Wet (in his capacity as liquidator
of the Pepkor Pension Fund) & others [2002] 4 BPLR 3259 (C) or [2002]
JOL 9319 (C) at paragraphs [176]
• But the registrar cannot protect all members and beneficiaries
• And we cannot assume that the boards of their funds, or even their
trade unions, are mandated by those members and beneficiaries to act
as they do in relation to retirement fund matters
Financial
Services
Board
Slide 8
Who represents members?
• Not the boards of retirement funds
“Section 7C deals with the object of the board which is to direct and control
the operations of the fund. Subsection (2) then proceeds to give guidance
to the board as to how that object should be pursued. Insofar as the
section enjoins the trustees to act in the interests of members, it must
therefore be understood in the context of steps taken in the direction,
control and oversight of the fund. It does not appoint the board as the
agent or representative of members to conduct litigation on their behalf,
even against the wishes of individual members. As illustrated by the facts
of this case, the interests of all the members of a fund do not always
coincide. Furthermore, there is the obvious potential of a conflict between
the interests of the fund, on the one hand and those of its members. on the
other.”
City of Johannesburg & others v SALA Pension Fund & others, judgment of
the Supreme Court of Appeal dated 9 March 2015
Financial
Services
Board
Slide 9
Who represents members?
• Not trade unions
o Not all members of a retirement fund will be members of a trade
union.
o And, even if they are, they may not have specifically mandated the
trade union to represent them in regard to matters relating to the
conduct of the retirement fund‟s business.
Financial
Services
Board
Slide 10
Who should the registrar consult before
prescribing new rules and standards?
• Answer: The public as a whole.
• But whose voices do we hear? o Service providers
o Industry bodies
The Actuarial Society of Southern Africa (ASSA);
The Association for Savings and Investments South Africa (ASISA);
The Council of Retirement Funds for South Africa (Batseta);
The Independent Regulatory Authority for the Auditing Profession
(IRBA);
The Institute for Retirement Funds Africa (IRFA):
The Municipal Retirement Organisation (MRO);
The Pension Lawyers Association (PLA);
The South African Institute for Chartered Accountants (SAICA) o Trade unions (but not often enough)
o Employer associations (although very seldom)
o Financial journalists
o ;
Financial
Services
Board
Slide 11
Whose voices does the registrar
hear?
• All of these bodies are important – the registrar needs the insights
derived from their knowledge, skill and experience.
• But only a few can be said to be truly “representative” of any
particular stakeholder group.
• We all need to accept our limitations
• We cannot assume that the registrar and/or any of these bodies
always knows what is in the best interests of members
• Let us acknowledge – as the IRFA leadership has done – that
bodies like IRFA are not “representative” of any specific
stakeholder groups. IRFA provides important forums for
discussion and debate and policymakers need to consider the
various views expressed.
Financial
Services
Board
Slide 12
All of us should help to empower
financial customers
• Consumer education and empowerment
• High school curricula
• Personal finance information conveyed through the media
• Community events
• Advice centres
• Education and empowerment of trade unions
• Education and empowerment of employers and their
associations
• Education and empowerment of community organisers
Note that some calling themselves community organisers are dodgy –
eg those claiming to represent thousands of people entitled to
unclaimed benefits, unclaimed surplus allocations and the like.
Financial
Services
Board
Slide 13
Education and empowerment of
board members & POs
• The effective governance, management and operation of
retirement funds is still the most important mechanism by which
the rights of members and beneficiaries of retirement funds will
be protected.
• Registrar will be prescribing training requirements for board members
– this must not be seen as promoting the replacement of member-
elected board members by professional trustees.
• Registrar will also be prescribing other governance requirements.
• But the main legal duties of board members and POs are clear – and
each board member and each PO must be able to account for his or
her conduct as such – some are already being required to do so in
relation to contentious decisions taken by boards collectively.