Legal updates and opinions
News / News
Request for information on the impact of the COVID-19 pandemic on contributions for retirement savings
by Hilah Laskov, Senior Associate and Chelsea Roux, Candidate Attorney
Reviewed by Shayne Krige, Director and head of the Investment Funds & Private Equity practice
The FSCA has previously allowed pension funds to make use of distress rules to alleviate the economic challenges faced by employers and employees due to the COVID-19 pandemic. In the absence of existing distress rules, pension funds were urged to register the necessary rules with the FSCA and to liaise with their policyholders/employers. In line with its supervisory approach, the FSCA has issued a request to pension funds to complete a survey detailing the impact the pandemic has had on financially distressed employers and employees and the related impact it might have on retirement savings.
- Background
On 30 March 2020 the Financial Sector Conduct Authority (the “FSCA“) issued a Communication[1] which encouraged all pension funds to apply the distress rules that they had in place to alleviate the challenges that employers and employees might be facing pursuant to the COVID-19 pandemic, and, where the existing pension fund rules do not provide for distressed companies, to urgently register distress rules with the FCSA (and then apply them as required).[2]
The distress rules referenced by the FSCA included a postponement of contribution payments, a temporary absence from work (with or without pay), a break in service (in instances where employees are not working) as well as a reduction of pensionable service (in respect of employees who are working reduced hours).
- Request for information
As part of its supervisory approach, the FSCA has required[3] (the “Request“) that all pension funds complete the survey attached as Annexure A to the Request.
The aim of the Request is to determine the impact that the COVID-19 pandemic is having on financially distressed employers and employees and the related impact on retirement savings.
- Format of information requested and timeline for submission
All registered funds must complete the survey in Annexure A of the Request[4] and submit it via email to the FSCA at contributionrelief@fsca.co.za by no later than 15 June 2020.
Annexure A is made up of a table containing several questions to which the pension fund must answer yes or no. There is also a section in which the pension fund may include any general comments. Please find the table that requires completion attached with this Update.
- Failure to comply with the request
A failure to provide the
specified information by or within the timeframe specified constitutes an
offence under section 267 of the Financial Sector Regulation Act[5] and
is liable on conviction to a fine not exceeding R1, 000 for each day during
which the offence continues.
[1] FSCA Communication 11 of 2020.
[2] The details of FSCA Communication 11 of 2020 are discussed in Financial Services Sector Update 1 sent on 9 April 2020.
[3] FSCA Information Request 2 of 2020 (RF).
[4] A copy of the Request is available on the FSCA’s website (www.fsca.co.za) under “Regulatory Frameworks > Notices > Retirement Funds.
[5] Act 9 of 2017.
Latest News
Resignation or dismissal?
The employment relationship involves two parties - the employer and the employee - and accordingly there are three possible ways [...]
A bank’s right to set-off and their duties towards third parties
by Tracy-Lee Janse van Rensburg, Director and Malachizodok Mpolokeng, Candidate Attorney It is well known that banks play a critical [...]
Vesting of Capital Gains through Multiple Trusts
by Erich Bell, Director The recent tax court decision IT 24918 (delivered on 18 March 2021) is the first case [...]
The SAA Business Rescue Process : A steep learning curve – Lessons for SOEs
Setting the scene Since being placed under voluntary business rescue in December 2019, South African Airways ("SAA") has been a [...]
Temporary Employer / Employee Relief Scheme (“TERS”) update
by Jacques van Wyk, Director; Andre van Heerden, Senior Associate; and Lukrisha Ramadu, Candidate Attorney On 20 April 2021 the [...]
The Legal 500 Europe, Middle East & Africa Rankings
The Legal 500 has released its 2021 rankings for the EMEA region. Regarded as [...]
