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
Broad-Based Black Economic Empowerment Commission announces investigations of trusts used in B-BBEE ownership structures
INTRODUCTION On 7 August 2017, the B-BBEE Commission announced that it had initiated 17 investigations for possible contraventions of [...]
Common shareholding and cross-directorship – a competitive conundrum when investing
"VICTORY IS BY NATURE INSOLENT AND HAUGHTY" Cicero The South African economic landscape undoubtedly reflects concentrated ownership structures. An [...]
To credit is to pay
Although common in practice, and especially between group companies, not much judicial thought has previously been given to the tax [...]
Domestic violence: a sad South African reality
The plight of violence against women in our country has been given much media attention in recent times, especially during [...]
Top ten reasons to register your trade marks
The significance of registering trade marks should never be underestimated by any business with countless reasons as to why you [...]
Understatement penalties: what is a bona fide inadvertent error?
INTRODUCTION The Tax Administration Act No 28 of 2011 (TAA) introduced the understatement penalty regime with effect from 1 [...]
