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PAIA Section 83(4) Report – 30 June 2023

PAIA Section 83(4) Report – 30 June 2023

A report by funds and companies to the Information Regulator

All private bodies, for example, companies and retirement funds, have been requested by the Information Regulator to provide it with a specific report.

The Information Regulator recently confirmed that providing this report is compulsory

On 7 May 2023, the Information Regulator published a notice requesting the heads of all private bodies (which includes companies and retirement funds) to submit a report to it under the Promotion of Access to Information Act (PAIA) (section 83(4)).

This report must be submitted by 30 June 2023.

What is a PAIA Section 83(4) Report?

This section [1] permits the Information Regulator to request the heads of private bodies to submit reports to it about requests for access to records that the private body holds.

[1] Section 83(4) of the Promotion of Access to Information Act: For the purpose of the annual report referred to in section 84 and if so requested by the Information Regulator, the head of a private body may furnish to that Commission information about requests for access to records of the body.

The Information Regulator must then submit an annual report to the National Assembly. [2] If the Information Regulator chooses, it can include information about access requests that private bodies receive in its annual report to the National Assembly.

[2] See section 84 of the Promotion of Access to Information Act.

Please note the difference between a section 32 report and a section 83(4) report –

1. The Section 32 PAIA report applies to information officers of public bodies and
2. A Section 83(4) PAIA report applies to heads of private bodies.

The Information Regulator has not asked private bodies to submit a report like this before.

What is a private body?

According to PAIA “private body” means –

- a natural person who carries or has carried on any trade, business, or profession, but only in such capacity;
- a partnership which carries or has carried on any trade, business, or profession;
- any former or existing juristic person; or
- a political party,
- but excludes a public body.

A retirement fund is a private body. The “Head” of a private body has been interpreted by many people to refer to the Principal Officer of a fund. Thus, the principal officer of the fund would have the responsibility to submit this report.

How do I submit the report?

The head of a private body must submit the report through the Information Regulator’s online portal. The following banner appears on the information Regulator’s website:

- There is a section 32 annual report user manual to submit the report. This seems to also apply to section 83(4) reports.

- Register the fund/company on the Information Regulator’s portal so that you can sign it and submit the report. This requires you to create your profile using an OTP.
- Once you sign in on your profile, you should see a PAIA section 83(4) report button.
- Once you click on the button to submit the report, you can complete the required information. There is a list of questions you must answer and then click “submit”.

Please complete all the questions and fields properly, otherwise, you may find yourself in receipt of an Information Notice from the Information Regulator.

PLEASE NOTE

We have not yet been able to successfully navigate the online portal and were told (at the time of writing this publication) by the Information Regulator’s office that the system was not operational. No doubt this is a teething problem and will resolve itself.

What are the questions in the report about?

We expect that the questions that will be required to be answered in the report will relate to the below. As these are the questions asked currently of public bodies, there may be changes to the questions for private bodies. Once we have seen the questions for private bodies, we can update you further.

- The number of requests for access to information under PAIA received;
- The number of requests for access granted in full;
- The number of requests for access granted in terms of section 46 of PAIA (mandatory disclosure in the public interest);
- The number of requests for access refused in full and refused partially and the number of times each provision of PAIA was relied on to refuse access in full or partially;
- The number of cases in which the periods stipulated in section 25(1) of PAIA were extended in terms of section 26 (1) of PAIA (periods relating to granting of requests and notifying of decisions);
- The number of internal appeals lodged with the private body and the number of cases in which, as a result of an internal appeal, access was given to a record;
- The number of internal appeals which were lodged on the ground that a request for access was regarded as having been refused in terms of section 27 of PAIA (failure to give a decision is a deemed refusal);
- The number of applications to a court that were lodged on the ground that an internal appeal was regarded as having been dismissed in terms of section 77 (7) of PAIA (failure to give notice of a decision in an internal appeal).

What happens if I don’t submit the report on time?

Compliance with the Information Regulator’s request for a section 83(4) report is compulsory. All heads of private bodies must submit the report by 30 June 2023.

Failure to comply may result in the Information Regulator, on its own initiative, conducting a compliance assessment on the private body in question [3].

[3] PAIA - the Information Regulator, on its own initiative, or at the request by or on behalf of an information officer or head of a private body or any other person may make an assessment in the manner prescribed of whether a public or private body generally complies with the provisions of this Act insofar as its policies and implementation procedures are concerned.

Keeping information about requests

It is important that funds keep information about requests under PAIA as well as certain requests under the Protection of Personal Information Act. This could be done in many ways, but a register should be kept in your chosen manner. Please let your consultant know if you need assistance with this.

It is important that the Information Officers of funds report requests to the Board and that such requests are properly considered and replied to within the relevant time periods. In addition, these requests should be analysed by the fund for possible learnings and improvements.

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Update on legal & regulatory changes – retirement funds

Update on legal & regulatory changes – retirement funds

The Conduct of Financial Institutions Bill (‘COFI Bill’)

Treasury is urgently finalising this legislation. COFI is likely to be sent to Parliament by Treasury towards the middle to end of this year.

Two-pot system

The date for implementation of the two-pot system remains 1 March 2024. It is unlikely that the next draft of the two-pot legislation will be seen before June 2023. The relevant legislation is likely to be published in July 2023. Funds and their service providers have pointed out that this severely curtails implementation time.

Two-pot matters that Treasury is still consulting and deciding upon:

How the two-pot system will apply to members of provident funds who were 55 or older on 1 March 2021 (and are still in the same provident fund).

The seeding debate: which is, whether to permit the transfer of some of what has already been built up by a member in a fund before 1 March 2024 into the member’s savings pot and allow the member access to it whilst they are still in employment. Treasury stated that Government is open to allowing once-off seeding, if it does not have adverse implications on liquidity and the costs of such withdrawal are not imposed on members choosing not to withdraw. This requires further consultation to take the relevant risks and benefits into account as well as possible trade-offs on vested rights. (Treasury could consider allowing phased withdrawals from the savings pot if the savings pot is seeded.)

Proposals related to defined benefit funds.

Legacy (old) Retirement Annuity Funds will be given the option to apply to the Financial Sector Conduct Authority (FSCA) individually for exemption from the two-pot system.

Amendments to the Pension Funds Act to allow for the two-pot system, including deductions like divorce and housing loans. These amendments will be made with the Conduct of Financial Institutions Bill.

Access to the retirement pot on retrenchment of a member by an employer will only be considered in phase two of the implementation of the two-pot system and will not form part of the initial phase.

Once the two-pot system legislation has been finalised, we will be able to provide further information to you.

The draft Omni Conduct of Business Return
(Omni CBR)

The Omni CBR requires new quarterly returns to the FSCA by funds and their service providers (among other types of financial institutions) across a number of broad reporting themes. It will be the main supervisory tool of the FSCA once it is implemented.

The FSCA is busy working through the comments and will issue an updated version of the Omni CBR. It intends to issue questions to the industry to allow it to gauge the financial impact of the Omni CBR on financial institutions.

The Financial Action Task Force (FATF) and the grey listing

Implementation of the FATF recommendations is a priority for the FSCA. These recommendations include:

1. The substantial increase of resources at the FSCA to deal with anti-money laundering (AML) and counter-terrorism financing (CTF). This could affect levies payable by financial institutions going forward as the FSCA
2. recruits more people in its Financial Intelligence Centre Act supervision department. In addition, it will result in more inspections and meetings; and
3. The imposition of sanctions in relation to AML and CTF. The FSCA is revising its enforcement methodology and sanctions and will communicate further with the industry on this issue.

The FSCA has said it will focus more on groups in relation to AML and CTF inspections. These inspections will be done jointly by the FSCA and PA.

Update on the Conduct Standard relating to the payment of contributions

What is the date of calculation of penalty interest?

In terms of the Pension Funds Act and the Conduct Standard, interest is payable on arrear contributions. This interest is calculated from the first day following the expiration of the period contributions were payable for until the fund receives the contributions – at the prime rate plus 2%.

There is confusion as to whether the penalty interest starts to run from the 1^st day of the month or the 8^th day of the month. The FSCA will provide its view on this.

Naming and shaming

The FSCA has previously said it will name and shame both employers and funds where there are arrear contributions owing to a fund. Recently, it stated that it is finalising its work to ‘name and shame’ non-compliant employers through its website. The FSCA also stated that where employers are in genuine financial distress they must engage with their funds and the FSCA.

Standards in the pipeline

Joint Standard on cybersecurity and cyber resilience

Standards for financial institutions (including retirement funds) on the management of cyber risks.

Objectives:
Sound, robust processes for managing cyber risks; Adoption of cybersecurity fundamental practices; Undertake systematic testing and assurance; Establish & maintain cyber resilience; and Provide notification of material cyber incidents.

When issued:
On 14 December 2022, a revised draft of the Joint Standard on Cybersecurity and Cyber Resilience Requirements Standard was published for a second round of public consultation.

Comment and expected next steps:
The FSCA has stated that cyber-resilience of financial institutions is a priority for it. Comments are now being considered and the Standard will be revised if necessary. The Standard will then be tabled in Parliament this year.

Draft Conduct Standard – conditions for living annuities in annuity strategy

Fund boards are required to establish an annuity strategy. This Standard establishes the criteria for living annuities forming part of a fund’s annuity strategy.

When issued:
The FSCA first published this draft Conduct Standard in November 2018.

Comment and expected next steps:
Comments received through the public consultation process have been processed and a revised version of the Conduct Standard was shared with industry associations that commented on the draft Conduct Standard for “fatal flaw” input before it is finalised for submission to Treasury (to forward on to Parliament). These comments are being processed by the FSCA.

Draft Conduct Standard – communication of benefit projections to members of funds

Deals with the communication of benefit projections to members to standardise the provision of minimum information to them and to ensure that benefit projections are communicated to members through the various stages of fund membership.

When issued:
The FSCA, published this draft Conduct Standard on 8 June 2020.

Comment and expected next steps:
Comments received through the public consultation process have been processed and the Conduct Standard underwent refinement. The FSCA will finalise the Conduct Standard and share it with commentators who submitted comments on the Conduct Standard during the consultation process for “fatal flaw” input only. Thereafter, it will be finalised for submission to Treasury (and then Parliament).

Draft Conduct Standard – conditions for investment in derivative instruments for funds

The Conduct Standard sets overarching principles for the use of derivative instruments by funds.

When issued:
On 8 June 2020, the FSCA published this draft Conduct Standard for comment.

Comment and expected next steps:
The Parliamentary period for comment has elapsed and the Standard will be made final within the next two months.

Draft Conduct Standard – conditions for securities lending for pension funds

According to the FSCA, fund assets represent a significant portion of investable assets of financial institutions and such assets form a large base of the securities lending in the financial industry. In addition, securities lending enables a fund to earn additional income to the benefit of the fund and its members. Thus, to balance the benefit with the possible risks associated with securities lending, the FSCA will prescribe conditions by providing general principles and requirements pertaining to service providers, agents, counterparties, lending limits and collateral etc.

When issued:
The draft Conduct Standard was issued on 7 October 2020.

Comment and expected next steps:
Due to the broader regulatory developments in respect of Securities Financing Transactions, this Conduct Standard has been pended until further notice.

Draft Prudential Standard – financial statements and regulatory reporting requirements for retirement funds

This Standard includes important new financial statements and audit requirements for retirement funds. This will lead to substantial changes in the financial reporting and audit requirements of funds. In addition, the proposals include that the financial statements of all retirement funds will be required to be audited, irrespective of the asset size of a fund.

When issued:
This Prudential Standard was published for public consultation on 9 November 2022.

Comment and expected next steps:
The draft of the revised format and requirements resulted in an extensive commentary. The comment period closed on 18 January 2023 and submissions are currently being considered by the FSCA. The Prudential Standard will be revised if necessary.

Draft Prudential Standard – Regulation 28 reporting requirements for funds

The current Regulation 28 quarterly reporting requirements for retirement funds are to be brought in line with the recent amendments to Regulation 28, including the requirement to report on infrastructure investments.

The timing to revise reporting is tight for retirement funds, and their service providers, including to implement the processes and system changes required to produce accurate and complete quarterly reporting. Thus, the first quarterly report due in 2023 will be given an extended time for submission (that is, submission on or before 30 September 2023).

When issued:
The FSCA published the draft Prudential Standard for public consultation on 4 November 2022.

Comment and expected next steps:
The FSCA is currently considering comments from the industry. The next version will be a final version to send to Treasury to table in Parliament. No further consultation will be done by the FSCA. The FSCA has stated that if the Prudential Standard is not finalised in time for the reporting at the end of September 2023, the FSCA will issue a request for information (which is mandatory) in order to ensure it receives the specified information.

The FSCA recently stated that it will be revising the draft format such that Table 2 (Infrastructure) and Table 3 (ESG) will be removed from the quarterly Regulation 28 report (as revised) and will be required only annually instead. This is because the infrastructure and ESG information is unlikely to change on a quarterly basis.

The FSCA is not yet sure in what format it will require the annual report from funds.

The FSCA stated that the broader definition of infrastructure recently included in Regulation 28 of the Pension Funds Act could lead to possible inconsistent classification of infrastructure assets and it is considering issuing an Interpretation Notice / Guidance Notice.

Development of a Joint Standard – corporate governance and culture

This Standard will apply to retirement funds as well as their service providers (in addition to other financial institutions).

When issued:
This Joint Standard is in the process of being developed by the FSCA and the Prudential Authority (PA). The industry has not yet seen a draft. The FSCA expects that the draft Joint Standard will be published for public consultation during the latter half of 2023.

Comment and expected next steps:
A Joint Governance Work Group (JGWG) consisting of various representatives from the FSCA and PA has been established to develop the governance framework.

Draft Conduct standard on the conditions applicable to fund administrators

The section 13B conditions applicable to administrators of retirement funds (a replacement of the current conditions)

When issued:
The FSCA made a decision to pend this Standard because of the work it is doing around transitioning to COFI. However, recently it has been said that it has urgent reasons for wanting to proceed with a watered-down version of this Standard. Watered-down in the sense that it will remove issues that could misalign with COFI.

Comment and expected next steps:
There is unlikely to be any further consultation by the FSCA on the Standard, except that it may be issued to industry bodies for a final “fatal flaw” check.

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FSCA Contributions and Prescribed Formats

FSCA Contributions and Prescribed Formats

Following our publication about the Financial Sector Conduct Authority’s Conduct Standard 1 of 2022 relating to the payment of retirement fund contributions, we now set out the compulsory reporting format that has been prescribed under the Conduct Standard.

Our payroll and employee benefits consulting expertise fits together to ensure our clients remain compliant with an ever-changing regulatory landscape.

Contributions and prescribed formats

The FSCA has published the following documents, which are available on its website at https://www.fsca.co.za/Regulatory%20Frameworks/Pages/Notices.aspx

FSCA RF Notice 14 of 2022: determination of format of documents in respect of requirements related to the payment of pension fund contributions, and

FSCA Communication 27 of 2022 (RF): publication of determination of format of documents in respect of requirements related to the payment of pension fund contributions.

Finalisation of the Conduct Standard

Conduct Standard 1 of 2022 (the Conduct Standard) about contributions, contributions statements, and reporting has now been published and is the law. The effective date set for the Conduct Standard is 20 February 2023. The existing Regulations of the Pension Funds Act (the Act) are repealed on the same date.

Publication of the prescribed reporting

The three prescribed formats are for the:

notification to and request by a fund to an employer;
reporting by a fund of contraventions to the FSCA; and
reporting by a fund of contraventions to the South African Police Services (SAPS).

1. Notification to, and request by a fund to an employer

A fund must notify every participating employer before the employer starts participating in the fund, and every year, of the employer’s duties, obligations, and liability under section 13A of the Act and the Conduct Standard. This notification to the employer is the first of the prescribed formats. This notification (and request) is directed by the fund to the Managing Director (or equivalent) at the employer.

The prescribed notice also requires that (both before the employer participates in the fund and on an ongoing annual basis) a request is made by the fund to the employer to notify the fund of the “identity” and “particulars” of the person(s) at the employer who are personally liable for compliance with section 13A of the Act which provides for both the payment of contributions and the provision of contribution schedules.

For different types of employer entities, the persons to be notified by the employer of the fund may be different. For a company, it is “every director who is regularly involved in the management of the company’s financial affairs”.

The employer must give the requested information to the fund within 14 days.

The other two prescribed formats are the report by the fund to the FSCA and the report by the fund to SAPS.

2. The report to the FSCA

When a fund reports contraventions relating to contributions or contributions statements to the FSCA as required by the Conduct Standard, it must do so in a prescribed format.

This report requires:

- The date the contravention was reported to the board;
- The nature of the contravention;
- A description of the action the board will take to remedy the contravention;
- That this course of action is set out in the monthly arrear contribution report uploaded to the FSCA’s online system; and
- That further updates are provided to the FSCA on the contraventions and actions taken on a monthly basis.

In addition, monthly updated reports by the fund to the FSCA are required until the contravention has been resolved.

3. The report to the SAPS

The prescribed format of the report by a fund to the SAPS is a sworn affidavit and includes the requirement for attaching annexures containing evidence of what is alleged in the affidavit.

The sworn affidavit is completed by the person specified in section 13A(6) of the Act, which is either the Principal Officer or the person authorised by the fund to monitor contributions (often called “the monitoring person” or the “authorised person”).

The report requires the provision of the following information to SAPS, amongst others:

- The reports, as required by the Act, that the fund has made so far in relation to the contraventions e.g. to the Principal Officer/monitoring person, the board of the fund, the FSCA, and members;
- The details of the contributions e.g. the rules requiring contributions by the employer;
- the requirement of the employer to deduct contributions and pay them to the fund;
- The employer’s information;
- The persons at the employer personally liable for contributions contraventions (as notified to the fund) or director’s names (if liable persons were not notified to the fund); and
- Information and documents about action previously taken by the fund.

Annexures required: resolution appointing monitoring person or Principal Officer, fund’s registration certificate, the rules, and special rules (if applicable), the proof of the employer’s participation in the fund; prescribed requests from the fund, and notifications from the employer about persons liable at the employer.

Formats that are not prescribed

The format of the reports to the monitoring person/Principal Officer, the board, and to members is not prescribed. The format of contribution statements is not prescribed, even though the content of the statements is prescribed.

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Updates: Two-pot System and POPIA

Updates: Two-pot System and POPIA

A: An update on the two-pot system

Changes to the two-pot system as a result of engagement with stakeholders

Over the last few months, National Treasury has engaged with stakeholders on the proposed two-pot retirement system. On 20 September 2022, it provided the Standing Committee on Finance with a Draft Response Document which includes responses to some comments received on the two-pot system.

While there are matters still to be decided by Treasury and we will see the development of the two-pot system before it is finalised, Treasury has given further insight into its thinking on several issues.

Treasury’s responses and proposals

- The implementation date of 1 March 2023 has been changed to 1 March 2024.
- It is mandatory for all funds to apply the two-pot system.
- Treasury stated that Government is, subject to conditions to be decided, open to allowing some of what has already been built up by a member in a fund before 1 March 2024 to be transferred into the member’s savings pot so as allow the member access to it. This proposal will receive attention going forward.
- From 1 March 2024, one-third of net (i.e. after costs) contributions will on a mandatory basis go into the savings pot and the remaining two-thirds of net contributions into the retirement pot.
- As retrenchments are involuntary, Treasury has proposed that, subject to conditions related to Unemployment Insurance Fund benefits and income the member is in receipt of, limited withdrawals, paid as an annuity, be permitted from the retirement pot if the member is retrenched.
- More work will be done to understand how the two-pot system should be applied to defined benefit funds (including public sector funds).
- The minimum annual withdrawal from the savings pot remains R2 000 (before fees). These withdrawals may be done annually on a rolling annual basis.
- A statutory minimum amount is applied to smaller retirement benefits on retirement (the de minimis amount) and retirement benefits below this amount are not required to be annuitised. This will continue in the two-pot system. The current proposal is that the statutory minimum amount will be applied to any amounts that would have been required to be annuitised on retirement (had the minimum amount not been applied).
- Section 37D deductions, such as housing loans/guarantees and divorce orders, require further consideration.
- Treasury’s intention appears to be to preserve the accrued right of older members of funds whose ongoing contributions to a provident fund are still not subject to compulsory annuitisation (because they were 55 years or older on 1 March 2021 and a member of the same provident fund when compulsory annuitisation became law). Such members may be given a choice of whether to opt into the two-pot system, to have ongoing access to a savings pot, or stay out of it, with their current accrued rights, and not have access to an ongoing savings pot. This will need to be clarified by Treasury going forward.

B. POPIA: a prescribed form for breach notifications to the Information Regulator

What is a breach?

All responsible parties (including retirement funds) are required to notify affected data subjects (e.g., members) and the Information Regulator as soon as there are reasonable grounds to believe that an unauthorised party has unlawfully accessed or acquired personal information.[1]

This is often called a security compromise or ‘a data breach’.

[1] Section 22(1) of the Protection of Personal Information Act, 2013

The information officer registration portal on the Information Regulator’s website is now working

please go to https://inforegulator.org.za/ and register if you have not already.

The responsible party must notify breaches

It is the responsible party that is required by law to notify breaches to affected data subjects and the Information Regulator – not their operators. For example, where an administrator is acting as the fund’s operator (e.g. it is paying benefits) and a data breach occurs, the administrator must immediately report this to the fund and the fund must attend to the required notification to both affected data subjects and the Information Regulator.

Funds should also follow their own data breach processes which may be set out in one of its processes or policies.

There have been a number of cases to date where funds, or their service providers, have notified the Information Regulator of breaches. The Information Regulator can decide whether to take enforcement action, such as referring the matter to the Enforcement Committee. We are not aware, at the date of writing, of a fund that has been referred to the Enforcement Committee when it reported a breach.

Timing of the notification

By law, breaches must be notified “as soon as reasonably possible after the discovery of the compromise”[2].

Failure to report timeously is a breach of the Protection of Personal Information Act.

[2] Section 22(2) of the Protection of Personal Information Act, 2013. When deciding on the timing of a notification, the fund may take into account law enforcement needs (if any) as well as any measures reasonably necessary to determine the scope of the compromise and to restore the integrity of the fund’s information system.

When notifying breaches to the Information Regulator, the new prescribed form MUST be used

On 12 August 2022, the Information Regulator issued:

a Security Compromise Notification Form – this is the mandatory form the fund must use to notify any breach to the Information Regulator.
a guideline to the Security Compromise Notification Form – the Guideline provides information about completing the form.

- The form is available on the Information Regulator’s website https://inforegulator.org.za/ under the tab of POPIA forms. It is a fillable PDF form.
- If you can’t fit all the information on the form, you may attach documents to your email.
- The fund will need to update the Information Regulator on any new information relating to the breach.
- Once completed, the form should be emailed to the Information Regulator using the following email address: POPIACompliance@inforegulator.org.za.
- The Information Regulator will acknowledge the notification and issue a reference number.
- There is no prescribed form for notification to data subjects of a breach.

The notification includes (among other things) the following information:

- The date of the incident and an explanation for any delay in reporting the incident to the Information Regulator.
- Whether the security compromise is confirmed or alleged.
- The type of incident (for example, loss, damage, destruction or unlawful access or processing of personal information).
- The categories of personal information that are potentially compromised.
- The number of data subjects impacted by the incident.
- the method of communication used to notify any affected data subjects.
- a description of the measures that the responsible party intends to take or has taken to address the security compromise; and
- a declaration by the responsible party that the information is accurate, true, and correct.

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Retirement Fund Contributions

Retirement Fund Contributions

NEW Requirements - FSCA Conduct Standard 1 of 2022

The Financial Sector Conduct Authority (FSCA) has issued new requirements for contributions, contribution statements, and reporting around contributions. It wants to standardise the manner and format of reporting by funds regarding contribution matters.

On 19 August 2022, the FSCA issued Conduct Standard 1 of 2022 which deals with:

- the payment of contributions to retirement funds by employers;
- the information and statements to be made by employers in contribution statements provided by employers to funds;
- reporting of contributions and contribution statement problems (in prescribed formats); and
- the content of attorney-fund agreements where attorneys are recovering contributions from employers for the fund.

Conduct Standards are law.

Effective date

The effective date of the Conduct Standard is six months after the date of publication, i.e. 19 February 2023 [1].

[1] The FSCA may determine different dates for the coming into effect of different provisions in the Conduct Standard.

Duty of the fund - notify employers of their contribution duties

A fund must notify every participating employer before the employer starts participating in the fund, and then every year, of the employer’s duties, obligations, and liability under section 13A of the Pension Fund Act (PFA) and the Conduct Standard. This must be done in the prescribed format.

It appears, from the consultation report, that funds may do this annual notification at any time in the year and not necessarily on the anniversary date of participation.

Contribution statements are to be provided by the employer to the fund.

The employer must provide the following contribution statements to the fund:

The initial contribution statements

The initial contribution statement, which is the first contribution statement provided to a fund by an employer after the employer begins participating in the fund must, at a minimum, include:

the name of the fund;
the fund registration number;
the period in respect of which the contribution is payable;
the name and address of the employer;
where an employer has multiple pay-points, the pay-point which made the deduction;
the contact person responsible at the employer or pay-point dealing with inquiries relating to contribution statements and payment of contributions;
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) of the Act;
in respect of each member, the following:

- - full name;
  - date of membership;
  - date of birth;
  - South African identity number or passport number;
  - employer pay or industry number;
  - income tax number;
  - contact number, including (where available) cellular phone number;
  - e-mail address (where available);
  - postal address;
  - residential address;
  - annual pensionable emoluments;
  - percentage and amount of contributions;
  - split between member and employer contribution; and
  - details of any additional voluntary contributions paid.

Subsequent contribution statements

A subsequent contribution statement means any contribution statement provided to a fund by an employer subsequent to the initial contribution statement and must, at a minimum, include:

- all the information in the initial contribution statement, (except that the information in subparagraph (g) above need only be provided if the identify of this person has changed as compared to the previous contribution statement);
- the membership number allocated to each member by the fund; and
- an indication of any changes as compared to the contribution statement for the previous period showing any differences in the data, including additions as a result of new members, reductions as a result of membership terminations, adjustments as a result of changes in pensionable emoluments, the payment of additional voluntary contributions, corrections due to error or any other information that may be relevant.

Employers’ obligations and enforcement

The Conduct Standard places the obligation on the employer to ensure that differences in membership data from month to month are provided to the fund. In addition, the employer must provide any other information that may be relevant to the membership data. Examples could include, in our view, information about upcoming changes within the employer that might impact on membership data.

Even where the administrator, on behalf of the fund, is tracking changes in members’ data from one month to the next and reporting on this, the employer retains the obligation to do so.

It is important that the FSCA will be able to use its enforcement powers (in the Act and in the Financial Sector Regulation Act) against the employer to enforce compliance with the Conduct Standard. This is in line with what we are seeing under the draft Conduct of Financial Institutions Bill, where the employer, with respect to contributions, will be a supervised entity and subject to the supervisory and enforcement powers of the FSCA (with respect to contributions).

Furthermore, we should not forget that the FSCA has said that it will ‘name and shame’ employers and funds where contributions are unpaid/short-paid. The FSCA recently announced that it will commence with this initiative in October 2022.

Employer’s declaration

A new requirement is that all information to be provided by the employer in contribution statements must be accompanied by a declaration by the employer that all employees eligible to be members of the fund are accurately reflected in the contribution statement. Again, this places an obligation on the employer to ensure that all eligible employees appear on the contribution statements provided to funds.

Timing

The Act provides that contribution statements must be provided either at the time of paying contributions or not later than 15 days after the end of the month in respect of which the contribution payment is made.

Minimum information

Note that it is the minimum information to be provided in contribution statements that are prescribed in the Conduct Standard and the fund may ask the employer for additional information.

Reporting

Although the Conduct Standard does not number the reports, we have done so below to aid understanding.

REPORT 1

Reporting on receipt of contributions and data to the principal officer / monitoring person [2]

[2] Monitoring person: means an authorised person referred to in section 13A(6)(b) of the Act – who is a person authorised by the board of the fund to report on section 13A compliance.

The person who is responsible for checking the receipt of contributions must report not later than fifteen days after the end of the period allowed to make the contributions (not later than seven days after the end of the month) to the principal officer or monitoring person:

- whether any matters previously reported on were not resolved;
- if the contribution statements data was not provided as required;
- where the payment of contributions and the data in the contribution statements cannot be reconciled with each other, except if the discrepancy is less than 2,5% of the total contribution payable for the relevant period (“the allowable discrepancy”); and
- if any contributions have not been received as required by the Act except for the allowable discrepancy.

REPORT 2

Principal officer / monitoring person report to the board of the fund

The principal officer of a fund or monitoring person must, within seven days after the receipt of report one, submit a written report to the board in respect of every relevant employer, if the employer:

- has not provided the contribution statements,
- not provide them on time,
- contributions have not been paid to the correct entity within the required time set out in the Act (see above); or
- if the previous non-compliance is still unresolved (S13A requirements).

Report two must include details of:

- whether any of the matters previously reported on were not resolved; and
- any instance where contribution payments and the contribution statement cannot be reconciled with each other, except for the allowable discrepancy.

REPORTS 3 & 4

Reports by the board of the fund

The board must ensure that any material contravention of, or material failure to comply with S13A requirements is, within 30 days of the board being informed in writing of the failure by the monitoring person:

- REPORT 3: brought to the attention of each affected member, in an appropriate manner. If the affected members cannot be identified, then the board must bring the contravention/ failure to the attention of all the members of the fund or all the members of the fund in respect of that participating employer; and
- REPORT 4: reported to the FSCA, in a format to be prescribed by the FSCA. The report must include the proposed course of action taken by the fund to remedy the contravention/ failure.
- “in writing” or “written” includes any communication by any appropriate electronic medium that is accurately and readily reducible to written or printed form. The communication must be clear, concise, comprehensive, and in a language that is easily understood.

REPORTS 5 & 6

By the board of the fund

Any material contravention of, or material failure to comply with the S13A requirements that continues for a period of 90 days must be reported by the board:

REPORT 5: in sufficient detail to the South African Police Service, in a format prescribed by the FSCA, within 14 days after the expiration of the 90-day period; and

REPORT 6: in writing to affected members or, where the affected members cannot be identified, all the members of the fund or all the members of the fund in respect of that participating employer, within 14 days after the expiration of the 90-day period.

Interest on late payment of contributions

According to the Conduct Standard, interest is payable on late payment of contributions or unpaid contributions, where contributions (or part of contributions) are paid after the prescribed period for payment. This interest is investment income for the fund.

Calculation

Interest is calculated from the first day following the expiration of the period contributions were payable until the fund receives the contributions.

Interest is calculated at the prime rate plus two percent. The fund and the employer may not agree that some other rate of interest will be paid or that no interest will be paid.

When is it payable?

The interest is payable to the fund by no later than the end of the second month following the month in respect of which the amount is payable.

Outsourcing by the fund to an attorney for the recovery of contributions

The Conduct Standard contains requirements for the fund’s board, which decides to outsource the recovery of contributions from an employer to an attorney. These are set out below.

Conflicts of interest

The board must have regard to:

any actual or potential conflict of interest that may exist in the selection and appointment of the collecting attorney; and
any board-approved policies of the fund relating to conflict of interest and outsourcing; and ensure that any conflict of interest is avoided.

Attorneys’ fees

The board must ensure that fees payable to the attorney for collection of arrear contributions are:

reasonable and commensurate to the service provided; and
do not impede the delivery of fair outcomes to members and the fund.

Agreements with attorneys

Where an attorney is appointed to recover contributions for a fund, the fund’s board must enter into an agreement with the attorney. The agreement must provide for at least the following:

that any amount recovered by an attorney in respect of contributions must be transmitted into the fund’s bank account within seven business days of receipt of the amount;
the fee structure;
specific instructions relating to the steps the attorney must take if the employer fails to pay the arrear contributions on demand;
anticipated timelines for recovering all arrear contributions by the attorney; and
frequency of reporting by the attorney to the fund about payments made by the employer.

Preparation

During the six-month phase-in period, administrators and funds will need to decide which processes, communication, and documentation they need to amend as well as consider their current systems and policies.

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