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
Raging against the machine
and Thembelihle Tshabalala, Candidate Attorney, The meteoric rise of artificial intelligence (AI) is generating infinite possibilities and particularly so [...]
Additional obligations on accountable institutions
Following on the recent amendments to the Financial Intelligence Centre Act, 38 of 2001 ("FICA") and most notably, the [...]
The proper interpretation of conflicting provisions in the Income Tax Act
and Luke Magerman, Candidate Attorney A recent tax court judgment added valuable jurisprudence to the often-litigated issue of the interpretation [...]
What is the relevance of s 52 of the MPRDA on retrenchments in terms of section 189 and 189A in the mining industry?
In National Union of Mineworkers v Anglo American Platinum Ltd & others (Amplats), on 15 January 2013, Amplats had [...]
Renewable energy tax incentives
and Luke Magerman, Candidate Attorney The draft legislation to give effect to the two renewable energy tax incentives announced in [...]
Breaking the Chains: the Case of Ndwandwe v Trustees of Transnet Retirement Fund and others – A not-so-friendly reminder that a pension fund is not bound by a nomination form
and Karabo Kekana, Candidate Attorney The recent decision of Ndwandwe v Trustees of Transnet Retirement Fund and others[1] (the Ndwandwe [...]
