Chairperson, I think looking at the levels of attendance and participation in this room, quite clearly, it's an area of interest for those of us who chose to remain in this House.
The Pension Funds Amendment Bill of 2007, which is being debated in this House today, addresses the urgent technical and regulatory issues in the Pensions Funds Act of 1956.
The House will recall that in 2001, the Pensions Fund Second Amendment Act was passed. That Act primarily dealt with two important issues, namely that of the apportionment of a surplus in a pension fund and minimum benefits for pensioners and members on withdrawal. The second amendment took a number of years to be finalised given the emotive issues concerned with the use of pension fund surpluses over the past few decades.
This House would also remember that the Act was vigorously debated at Nedlac and it was recognised that, in many instances, former members of pension funds were important contributors to the building up of pension fund surpluses over time. As a matter of equity in any distribution of surpluses the former members would have to be considered if that process begins. An equitable apportionment of surplus therefore involves all stakeholders in the fund: former members, current members and employers.
This process naturally involves large sums of money, which in some cases could require an employer to repay surpluses utilised improperly by the fund. The vast majority of pension funds have complied with the spirit and intention of the 2001 Pensions Act in apportioning the fund surpluses. But not unexpectedly, given the sums involved, some legal challenges have been brought forth since 2001, as quick legal minds and those seeking to avoid liability scoured the Act for any form of legal loopholes.
Chairperson, in many ways these challenges seek to subvert the spirit of the original legislation passed by this very House. By interpreting the law in the narrowest sense possible we would not do this House justice if we did not seek to reinforce and to entrench the provisions and the spirit of the 2001 legislation with regards to surplus apportionment, thereby protecting the most vulnerable in our society.
The Bill before this House therefore attempts to close the legal loopholes by clarifying certain provisions related to surplus utilisation, particularly if it was done in the past by employers and other provisions relating to surpluses generally. The proposed changes contained in the Bill follow the same principle rectified by this very House in 2001: namely, that surpluses apportionment is not a so-called ``witch-hunt'' against employers but rather it ensures fairness in surplus apportionment processes. It is about ensuring that a proper balance of interest is struck between all stakeholders involved.
I should add that although the Bill primarily involves a clarification of a variety of the provisions relating to surpluses, it also addresses a number of other important issues, including bringing bargaining council funds within the ambit of the Act, thereby affording their members the protection and oversight offered by the Registrar of Pension Funds and recourse to the pension funds adjudicator; codifying the duties of pension funds administrators which follows debates and investigation in so-called secret profits retained by administrators; changing the provision governing the pension funds adjudicator which seeks to clarify the jurisdiction and operations of that office; ensuring a more equitable treatment of a non- member spouse in the case of divorce. This will see an end to the inequitable treatment of divorcees, whereby little or no growth is attached to the portion of the pension monies allocated to them by the order of the court.
The Bill also incorporates relationships recognised under the recently promulgated Civil Union Act and makes allowances for other court orders such as maintenance orders. These changes, hon members, therefore provide further protection to dependants and other beneficiaries.
Importantly, the Bill also significantly increases the power of the Registrar of the Pension Funds, including the power to impose administrative penalties. This House is well aware of several instances of abuse in the pension funds and insurance sector, which have been exposed in the past few years. Such abuses are often due to lax governance, inadequate disclosures, conflicts of interest and poor trusteeship. In the face of such difficulties, not only do these problems need to be addressed, but the regulator requires sufficient powers to intervene where necessary to protect the interest of members.
The provision of this Bill will bring supervisory powers of the Registrar in line with international standards and also with best practices. In conclusion, this Bill is indeed an important step in the continuing effort to protect the monies members faithfully contributes towards their retirement over their working lives. It will ensure that the original intention of this House in 2001 is adhered to and that all stakeholders, including former members, will be treated fairly in the apportionment of pension fund surpluses. We also owe it to members to build not only a sound governance and legal framework but also to provide those who police participants in the industry - in this case the Registrar of Pension Funds - sufficient powers whereby they can efficiently execute their responsibilities and duties.
These are indeed urgent improvements to the regulatory architecture that can be instituted now for the benefit all while we simultaneously set about a broad social security and retirement fund reform process.
Before closing, once again I would like to thank particularly the Portfolio Committee on Finance under the chairpersonship and the steady hand of the hon Nhlanhla Nene. Thank you, hon Chairperson. [Applause.]