Speaker 0:
joining me now at the bat Winter conference from the office of the pension funds adjudicator Mugo Lukman, pension funds adjudicator as well as Nahi is a senior legal advisor from the pension funds adjudicator. Welcome to you both. Thank you. Thank you very much. So, Nam, you've just come off stage, uh, discussing some of the prominent changes in regulation

Speaker 0:
surrounding pension funds and their allocations. Perhaps you can take us through some of these, um, regulatory changes. And what are the effects that it's going to have on pension fund decisions? Yes. So one of the most important changes that are coming about now is, uh, the two part system. And in terms of the two part system, a member will be entitled to access a certain portion of their retirement savings.

Speaker 0:
Um, the, uh, draught legislation that was published last Friday by Treasury says it's a maximum of 10% up to 25,000 rand.

Speaker 0:
Uh, and in exchange for that, uh, a member has to remain, um, has to preserve their their their pension benefits, um, and can only access the port once they reach retirement age.

Speaker 0:
Mr. Do you perhaps think that there might be some challenges that the new, um two system, um, might present to pension funds as well as

Speaker 1:
administrators. I think if, um, you considered our presentation because one of the

Speaker 1:
biggest non-compliance issues is around non-payment of contributions. What, um, in legislation like this will do is when it comes into play, it will force members to almost go and find out what is in their port. You know what is in my my retirement port? What is in my port

Speaker 1:
that I can access, which might assist us to accelerate the knowledge of members that, in actual fact, their employers are not contributing to to their retirement fund, even though they are deducting from their salaries, and they are supposed to also pay over their portion. So I think, from a fund's record keeping point of view

Speaker 1:
for members knowing what exactly a fund is holding for them, legislation of this kind will sort of accelerate those issues and force funds to pursue what is outstanding on behalf of members.

Speaker 0:
So another point that I'd like to touch on is through the covid pandemic, right? We started seeing

Speaker 0:
probably a rising complaints surrounding death benefits what have been some of the lessons that were learned, um, surrounding the payments and death benefits.

Speaker 1:
I think one of the biggest lessons was that pension funds are not agile enough

Speaker 1:
because there were quite a lot of instances where even where they got third parties to assist the delay was unacceptable. You have a simple situation where a deceased only had one dependent, but it took over two years for them to

Speaker 1:
even start and complete an investigation. So funds need to adjust their rules, their processes and everything that that that sort of allows them to be agile enough to deal with, uh, with with conditions that they that are unpredictable for them.

Speaker 1:
I think as an industry, because of also of that lag in time, we were able we should take our lessons from the short term industry, for example, where certain

Speaker 1:
claims were excluded that, uh, companies ended up going to court and whatever and that so, uh, lucky for us funds are allowed. Board members are allowed some form of discretion to say, Um, how do we allocate these benefits? So it's important that for that period that there was covid

Speaker 1:
the circumstances that surrounded the passing of members. You know, there are members that were very diligent. They had wills, they had nomination forms. They had all sorts of things in place. But suddenly the people they nominated passed away when the and they were also in a state where they couldn't do anything.

Speaker 1:
So it's the the funds have to be. Have to be cognizant of that. Say this person did everything right. But the conditions were such that they couldn't do this one last step. How do we help them to get a proper outcome? I don't think that we want to land up in the Supreme Court of Appeal and the constitutional

Speaker 1:
where we actually have discretion to sort of consider certain things ourselves.

Speaker 0:
Thank you. So I want to understand. Then what could be some of the developments or some of the points of improvement that pension funds could, um, work on, perhaps to become more efficient in this regard? Yes, I think, um,

Speaker 0:
what the covid pandemic did was it triggered a whole lot of new legislation, and I think

Speaker 0:
the justification was don't let a good crisis go to waste. So we may have, um, brought in some changes on 37 c, which deals with the debt benefits. Um, but I think there needs to be a simplification of the process. Uh, so we need to see legislation that actually simplifies the process. Uh, debt benefits has always been a challenging area for trustees.

Speaker 0:
Um, they've always found it difficult, not because the legislation is hard to understand, but to implement it to conduct a proper investigation, et cetera, presents a lot of challenges. And if you compare it to other legislation, uh, like the administration of the Disease Estates Act and things like that, uh, those legislations are a lot easier to implement compared to 37. Um, so

Speaker 0:
there is currently some public publication that's been issued by the national treasury through the bill. They want to implement some changes on 37 I think pension funds could use that opportunity to submit comments and make proposals on how the legislation can be,

Speaker 0:
uh, simplified. I mean, they are the ones who have the practical experience of dealing with these things, and, uh, it carries a lot of weight when it comes from them. Yeah, Then, just perhaps to close up the session, just some words of wisdom to perhaps leave some pension fund principal officers and trustees with regards to improving their efficiency.

Speaker 1:
I think what we indicated in our talk was really around, going back to the basics. There are a lot of basic things that are not being done, and it's really about compliance to the act. Compliance. The regulations, court orders, all that to just try and have an industry

Speaker 1:
where, because of the long term relationships that that that that are sort of part of being a pension fund member, we need to make sure that there is a lot of trust in the system that will then encourage people to remain in the system for longer. And then we get the outcomes that

Speaker 1:
the system is intended to

Speaker 0:
achieve and, of course, member education all the way. Thank you very much for sharing your insights. We appreciate your time, thank

Speaker 1:
you very much.