New Retirement Funds Act challenged

SHARE   |   Monday, 23 May 2016   |   By Staff Writer
New Retirement Funds Act challenged

The Retirement Funds Act passed in the last sitting of Parliament to regulate pension funds is already being challenged, long before it is put to practice, The Patriot on Sunday has learnt. At the centre of the storm are complaints by employee trustees at Botswana Public Officers Pension Fund (BPOPF) that they were never consulted during the drafting of the new law-which repeals the Pension and Provident Funds Act. This contradicts what Minister of Finance and Development Planning Kenneth Matambo told Parliament in August 2014, when presenting the Bill. Matambo had said the drafting of the Bill involved extensive consultations with several stakeholders including pension fund members, asset managers, fund administrators, pension fund providers and trustees.
The retirement funds to be regulated by the new law include annuities, preservation funds, beneficiary funds, and external funds, among others. The Bill also regulates administrators and boards of retirement funds. Tobokani Rari-who together with eight others represent public servants (government employees) in the Board of Trustees is adamant that no consultation took place. "As key stakeholders in the biggest pension fund in the country we deserve to be heard on matters that directly affect our constituents, particularly that some changes will impact on the representation in the board. We have since engaged attorneys to advice on options available to us to seek redress," said Rari.

Presenting the Bill, Matambo said several reforms were initiated by government to streamline the regulation of the sector, among them, the establishment of the Non-Bank Financial Institutions Regulatory Authority (NBFIRA). He explained that NBFIRA has overarching regulatory responsibilities for several financial services including insurance, retirement funds, collective investment undertakings, securities and other related activities. The new Act empowers NBFIRA to exercise better supervision over retirement funds in terms of risk-based oversight, investment of fund assets, transparency of funds to members, participation by members in the affairs of the funds and clear requirements for trustees and management of fund contributions, said Matambo. The Act provides a framework which outlines the governance of administrators of funders and ensures that investments are approved and guarded by NBFIRA to protect members’ interests. The Act also prescribes the requirements for licensing, issuance of licences and the amendment of the fund rules. There is also a special provision relating to multi-employer retirement fund, beneficiary fund and perservation fund. Further, the new Act will bring changes like setting out the minimum and maximum number a board can have, reducing the time for submission of audited financial statements and allowing for deductions from pension for purposes of maitenance of minor children and including pension benefits for division during divorce proceedings of spouses.

NBFIRA Board of Directors
The NBFIRA Act entrusts all corporate governance responsibilities as well as all operational and regulatory functions of the financial services law to the NBFIRA Board of Directors which is currently comprised of:
• M. Dube, Chairperson
• Dr. Tebogo Matome (LEA CEO), Deputy Board Chairperson
• A.T. Khunwana, member appointed by the Minister of Finance and Development Planning
• Ludo Tema, member appointed by the Minister of Finance and Development Planning
• Linah Mohohlo, ex officio member as Governor of the Bank of Botswana
• Solomon Sekwakwa, ex officio member as Permanent Secretary MFDP

Retirement Funds
The Non-Bank Financial Institutions Regulatory Authority has supervisory powers over funds which include investigating any part of the affairs of a licensed fund, or business that the Authority suspects is carrying on the business of a fund.
The Income Tax Act; regulates the taxation of retirement fund contributions, investment income and benefits.

Licensing of NBFI's
NBFIRA is mandated with the licensing of retirement funds within Botswana and as such,In accordance with Section 43 of the NBFIRA Act, the information below will assist Retirement Funds, Fund Administrators and Fund Custodian if they so wish to license as such.