Recent legislation demands that Boards of Trustees and their advisors introduce new systems to ensure that each funs operate in compliance with the mandated provisions.
The challenge of recent legislation demands that Boards of Trustees and their advisors introduce new systems to ensure that each fund operate in compliance with the mandated provisions.
There are two sets of legislation to be implemented. These are:
- The Protection of Personal Information Act
- The Default Regulations to the Pension Funds Act
The Protection of Personal Information Act 4 of 2013 (POPIA) was published in the Government Gazette on 26 November 2013. POPIA will only fully commence on a date to be determined by the President. Different commencement dates will be set for different sections of the Act. The Draft Regulations to POPIA were released by the Regulator on the 8th September 2017. A deadline for comments has been set for the 7th of November 2017.
Once all the provisions of POPIA have commenced, there will be a transitional period of 12 months to give time to ensure compliance with the Act. Until the full commencement of POPIA, the personal information of data subjects in South Africa will continue to be afforded the general protections provided for under the common law and the Constitution of the Republic of South Africa Act. In terms of the common law and constitutional right to privacy, data subjects have a reasonable expectation of privacy which may not be wrongfully or intentionally interfered with. The purpose of POPIA is to give effect to the common law and constitutional right to privacy and to regulate how the personal information of individuals may be “processed”. POPIA does not fundamentally change the existing requirements imposed by the common law and constitutional right to privacy, but will improve the enforcement to ensure the protection of personal information. Personal information is any information that identifies an individual and includes a person’s name, contact details, identity number, employment history, financial information, biometric information and personal correspondence. POPIA also recognises a special category of sensitive personal information, referred to as “special personal information”.
Retirement Funds are going to have to develop a strategy whereby set protocols are set for:
- Creation of Information
- Storage of Information
- Use and Sharing of Information
- Archiving and destruction of Information
Retirement Funds will have to set protocols in place to manage the Default Regulations to the Pension Funds Act. On the 22nd July 2015, National Treasury released Draft Regulations to the Pension Funds Act which formed part of the broader retirement and savings reforms that were initiated in 2011. The final Regulations have now been issued and will come into effect on the 1st of March 2019 for existing funds.
The Minister of Finance has the power to make regulations “on all matters which he considers necessary or expedient to prescribe in order that the purpose of the Act may be achieved”
As far as the Minister of Finance is concerned, trustees have duties to protect members – however, many trustees lack simple initiatives to substantially improve “the retirement outcomes of members”. The Minister felt compelled to clarify trustees’ duties to direct funds to offer –
Default Investment Portfolio – a simple, inexpensive, appropriate Default Investment Portfolio as an option on induction of a new member
Default Preservation and Portability Strategy – facilitate preservation and portability of retirement savings by designing Default Preservation as an option on member exits from a fund
Default Annuity Strategy – offering counselling and an efficient, transparent and cost-effective Default Annuity as an option on retirement
All retirement funds must develop a set of “default policies” that are “in the long-term interest of members rather than service providers”. The Regulations prescribe the conditions that default strategies are required to meet.
Whilst the intentions of the legislation are good there is no doubt that funds will have to put serious efforts in place to see that both the requirements of POPIA and the Default Regulations are considered.
Each fund will have to consider and design appropriate systems and processes to conform with these legislative measures as well as amending the Fund Rules to add definition of the various Defaults as well as making provision for the protection of all personal information as required by POPIA
Camargue Underwriting Managers will be sponsoring Workshops, facilitated by FQ Financial Skills, to be held in Johannesburg and Cape Town respectively in early 2018 where experts in their fields will present on these issues. For more information please contact Greg Preston (firstname.lastname@example.org) or Bruce Kokkinn (email@example.com) or go to www.fq.co.za and register on contacts.