Chairperson, hon Minister, hon colleagues, the Pension Funds Amendment Bill is an attempt to address past injustices of denying members what was rightfully theirs, and seeks to prevent the same situation from arising in future.
In the short-term, the Pension Funds Amendment Bill deals with the immediate concerns with the implementation of the current Act, whereas its longer-term vision deals with social security and retirement fund reform processes
The objectives of the Bill are as follows: The existing Act exempts bargaining council funds from registering under the Pension Funds Act; and there are 1,5 million members in these funds. The problem with the existing arrangements is that members of these funds are not afforded equal protection by being under the Act and under oversight by the registrar.
In addition, members of these funds do not have access to the Pension Funds Adjudicator. The proposed amending Bill brings such funds into the regulatory net. Subsequently, a concern was raised that the inclusion of bargaining council funds under the Pension Funds Act would result in conflict between this Act and the Labour Relations Act.
It is argued that the Minister of Labour endorsed the inclusion of bargaining council funds and already 165 funds have registered voluntarily. The recent practice involving bulking and secret profits demonstrates that although the law was in place, it is necessary to codify the specific duties of the administrator and the Act.
The pension fund administrator receives premiums from many funds and bulks these receipts under its control and thereby obtains a high interest from the bank. There is nothing wrong with this practice; the point, however, is that the interest yielded from this practice does not accrue to the members of the pension funds.
The higher interest received from the consolidation of premiums of pension funds ends with the administrator of funds. The secret profits are not disclosed to the managers or trustees of the pension funds. The administrators must have properly trained staff, well-defined compliance procedures, must furnish the registrar, as requested, with information timeously and must disclose and manage conflicts of interest vigorously.
Every fund, including funds which have no actuarial surplus, should conduct an investigation into proper use in order to determine if a distribution is required.
The current Act does not make provision for a deputy or an acting adjudicator and this omission impedes operational efficiency. The current amendments provide for one or more deputies or adjudicators to be appointed by the Minister of Finance.
The current law does not permit the registrar to remove a trustee without first applying to a court of law. It is argued that the court process is too lengthy and does not serve the interests of the members. It is proposed that the registrar may, in the best interests of members of the fund, remove the board member of the fund in cases where the fund is not in a sound financial position and the board member fails to act when the fund is in a precarious financial position and does not manage the fund in terms of the rule of funds.
The Bill proposes that the registrar may replace any board member who is not fit and proper. It is also noteworthy that the registrar cannot behave arbitrarily because a process of appeal is still available against any decision of the registrar.
The current law allows for a spouse's portion on divorce to remain in the fund without any return on growth. This treatment of the spouse's share is unfair, since the spouse's share remains in the fund for a considerable time. The Bill allows for a payment of benefits to a non-member spouse in terms of a divorce order, and permits payment of benefits that include growth.
It further proposes that the above-mentioned proposals be retrospective and be deemed to have come into operation on 7 December 2001 under section 43.
The objective is to protect members and former members and the intention in passing this legislation is to deal with the appropriation of surpluses. The Select Committee on Finance appeals to the NCOP to support the amended Pension Funds Amendment Bill.
Thank you.
Thank you very much, hon members.
Debate concluded.
I shall now put the question. The question is that the Bill be agreed to.
In accordance with Rule 63, I shall first allow political parties the opportunity to make their declaration of vote, if they so wish.
Is there any party that wishes to make a declaration?
There is none.
We shall now proceed to the voting on the question. Those in favour say "Aye".
HON MEMBERS: Aye!
Those against will say "No".
HON MEMBERS: No!
I think the "Ayes" have it.
The majority of members have voted in favour. I therefore declare the Bill agreed to in terms of section 75 of the Constitution.
Bill agreed to in accordance with section 75 of the Constitution.