Transcript Document

Financial
Services
Board
The role of FSB in supporting
efforts towards the disbursement
of benefits for mineworkers
Presentation for
Regional Dialogue
By: Carlo da Gama
26 March 2015
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Overview of FSB
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Established in 1991;
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Independent institution established by statute to oversee the South African
FinancialNon-Banking Financial Services Industry in the public interest;
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Our vision is to promote and maintain a sound financial investment
environment in South Africa;
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Our mission is to promote the:
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Fair treatment of consumers financial services and products;
Financial soundness of financial institutions;
Systemic stability of financial services industries; and
The integrity of financial markets and institutions.
Overview of Retirement Fund Industry
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Administrators: 168
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• Number
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of funds: 5,000
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Members: 13,4 million
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Total assets: R1,8 trillion
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What is an unclaimed benefit?
Defined in the Pension Funds Act (‘PFA’) as:
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benefit other than those mentioned below, not paid to a member, former member or beneficiary within
Financial24 months of the date on which it, in terms of the rules of the fund, became legally due & payable;
Services
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a benefit payable as a pension / annuity to a member, former member or beneficiary within 24 months
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of –
i.
the expiry of the guarantee period for pension payments provided for in the rules of the fund; or
ii. the date on which any pension / annuity legally due & payable in terms of the rules of the fund
became unpaid;
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surplus benefit payable to former member that cannot be traced - not paid within 24 months after
surplus approval;
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any benefit that remains unclaimed/unpaid to a member, former member or beneficiary when a fund
applies for cancellation or registration or where the liquidator is satisfied that benefits remain
unclaimed / unpaid, excluding –
i.
ii.
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section 14 transfer, where annuity is purchased i.r.o pensioner or otherwise in terms of the PFA;
death benefit payable to a beneficiary i.t.o s37C not paid within 24 months from date of death of
member.
How do unclaimed benefits arise?
• Employer provides inaccurate or incomplete member information;
• Fund administrator capture errors;
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• Administrator
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churn;
• Member education/awareness;
• Information changes after member leaves fund;
• Member not registered for tax;
• Incomplete or no withdrawal documentation received;
• Migrant labour particularly in mining sector.
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Establishment of Unclaimed Benefit Funds
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Prior to 2007, retirement funds had provisions in their rules allowed for
unclaimed benefits that remained unclaimed to revert back to funds.
FinancialPrescription Act allowing for benefit not claimed within 3 years to prescribe;
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In 2007 PF Circular No. 126 issued to all retirement funds:
• Provided guidelines on treatment on unclaimed benefits;
• Introduced a definition of an unclaimed benefit.
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Retirement funds were required to amend their rules to in-line with Circular
before 31 December 2008.
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Financial Services Laws General Amendment Act 22 of 2008 inserted a
definition of an unclaimed benefit in section 1 of the PFA.
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Establishment of Unclaimed Benefit Funds
(continued)
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The Revenue Laws Amendment Act 60 of 2008 provided for establishment of
unclaimed benefits funds – ‘special’ purpose preservation funds.
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Services Laws General Amendment Act No. 45 of 2013 inserted a
definition of an unclaimed benefit fund in section 1 of the PFA to mean:
“a fund that is established for the receipt of unclaimed benefits contemplated
in the definitions of a pension preservation fund and a provident preservation
fund in section 1 of the Income Tax Act, 1962 (Act No. 58 of 1962)”;
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Since 2009 a number of funds submitted applications in terms of section 4 of
PFA to register as unclaimed benefit funds.
Overview of Unclaimed Benefits
•Unclaimed benefit funds (50 ‘active’ funds):
- R4,6 billion
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- 792,000 beneficiaries
•Aggregate unclaimed benefits (including occupational, retail and unclaimed
benefits funds):
- R20 billion
- 3.5 million beneficiaries
•Mining Sector:
- R5,2 billion
- 200,000 beneficiaries
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Role of the FSB in relation to unclaimed benefits
• Complaints in terms of the PFA dealt with by the Office of the Pension Funds
Adjudicator;
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Section 30I (1) of the PFA: “The Adjudicator shall not investigate a complaint if
the act or omission to which it relates occurred more than three years before
the date on which the complaint is received by him or her in writing.”
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The PFA only empowers the FSB to make enquiries with administrators, funds
and other parties (employers);
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On this basis, we assist complainants who are unable to lodge a complaint
with the Office of the Pension Funds Adjudicator – ‘walk-in’, telephonic (call
centre), electronic mail and post.
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Statistics on complaints
• Following the publication of article in Business Day we received +/-3,000 calls
per day (average is 150) up to December 2014.
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• Dedicated email address ([email protected]) in December
2014. 847 emails to date.
• Of 847 emails only able to assist +/- 15% of members.
• More than 120 walk-in clients since November 2014 to date.
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Challenges in assisting with unclaimed benefits
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No central database;
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education/awareness;
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Information required in order to investigate such as name of pension fund,
name of employer, proof of membership (benefit statement) and payslip;
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Time lapse – adverse impact on data / record keeping;
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Nature of funds might not have required employer names to be provided to our
office therefore not on our records.
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Challenges in assisting with unclaimed benefits
(continued)
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Access and means to complain/enquire with administrator, funds or FSB
office;
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Misinformation leading to exploitation - No regulation of tracing agents and/or
3rd parties acting on behalf of members;
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“Red tape” when claiming benefits eg. stamp by employer or originals
documents.
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Solutions and Proposals to Other Stakeholders
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Central database maintained by the registrar (issue PF. Circular to collect
information from funds/administrators - preliminary info to assist member);
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Unclaimed benefits communication project – media and print;
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Enhancing FSB supervision of unclaimed benefits within occupational, retail
and unclaimed benefit funds:
• Draft PF. Circular for exemptions of transfers of unclaimed benefits;
• Supervision of tracing agents;
• Reporting of tracing and payment efforts by funds;
• Quality audit on member information and additional prescribed
minimum information (such as cellphone number)
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Solutions and Proposals to Other Stakeholders
(continued)
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Greater co-ordination between FSB, funds, administrators and organisations
representing members;
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Preparation of information circular to inform members in major labour sending
countries (Lesotho, Swaziland, Mozambique and Botswana) of unclaimed
benefits;
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To address POPI concerns, work with industry to draft a proposed code for
employee benefits industry which would allow us to collect and subject to
appropriate controls share information on unclaimed benefits.
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Questions?