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pension Guide

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The Bowman Gilfillan Africa Group

Bowman Gilfillan Africa Group is one of Africa’s premier corporate law firms, employing over 400 specialised lawyers. The Group provides domestic and cross-border legal services to the highest international standards across Africa, through its offices in South Africa, Botswana, Kenya, Madagascar, Tanzania and Uganda.

Differences in law, regulation and business culture

can significantly increase the risk and complexity

of doing business in Africa. Our aim is to assist our

clients in achieving their objectives as smoothly

and efficiently as possible while minimising the legal

and regulatory risks.

While reliable technical legal advice is always very

important, the ability to deliver that advice in a

coherent, relevant way combined with transaction

management, structuring, negotiating and

drafting skills is essential to the supply of high

quality legal services.

The Group has offices in Antananarivo, Cape Town,

Dar es Salaam, Durban, Gaborone, Johannesburg,

Kampala and Nairobi. Our office in Madagascar has

francophone African coverage in Benin, Burkina Faso,

Burundi, Cameroon, Central African Republic, Chad,

Congo Republic, Gabon, Guinea, Ivory Coast, Mali,

Niger, Rwanda, Senegal and Togo.

We have a best friends relationship with leading

law firm Udo Udoma & Bela-Osagie, in Nigeria,

which has offices in Lagos, Abuja and Port

Harcourt. We also have strong relationships and

work closely with law firms across the rest of Africa

which enables us to provide or source the advice

clients require in any African country, whether on

a single country or multi-jurisdictional basis.

We act for corporations, financial institutions, state

owned enterprises and governments providing

clear, relevant and timely legal advice to assist clients

achieve their objectives and manage their legal risks.

Geographical and sector specific teams are utilized to

provide clients with the highest standards of service.

In the cross-border arena the Group has extensive

experience in the resources, energy, infrastructure,

financial institutions and consumer goods sectors.

Bowman Gilfillan Africa Group’s South African, Kenyan

and Ugandan offices are representatives of Lex Mundi,

a global association with more than 160 independent

law firms in all the major centres across the globe.

This association gives access to firms which have been

identified as the best in each jurisdiction represented.

INTRODUCTION 02

BOTSWANA 04

EGYPT 08

GHANA 10

IVORY COAST 15

KENYA 17

MADAGASCAR 23

MAURITIUS 26

MOZAMBIQUE 29

NAMIBIA 32

NIGERIA 36

SENEGAL 40

SEYCHELLES 42

SOUTH AFRICA 45

SWAZILAND 50

TANZANIA 53

UGANDA 57

ZAMBIA 60

ZIMBABWE 64

Contents

Pension funds are among the largest and potentially the most influential institutional investors on the African continent.

It is not surprising then that there is increased focus on

where they are investing and how they are investing.

As a continent that is forecasting strong economic

growth there are opportunities for pension funds to

invest in Africa’s growing economy – but there are also

opportunities for pension funds to invest in growing

Africa’s economy. Pension funds are increasingly

exploring investment opportunities in infrastructure and

private equity – and are also looking at ways to invest

responsibly and sustainably. As owners of significant

assets, and the guardians of members’ retirement

savings, pension funds need to ensure high-quality

decision-making, sound benefit design, proper risk

management, healthy service-provider relationships,

constructive regulator engagement and proper

governance in all aspects of fund operations.

It is crucial therefore that the boards of pension funds

have the knowledge, the resources and the support

to enable them to navigate an increasingly complex

regulatory environment.

Bowman Gilfillan has pension law specialists in various

of our country offices and we have the largest, and the

leading, Pensions Law team in South Africa.

Our team comprises lawyers with pension law expertise

as well as lawyers with pension investment law

expertise. We are able to provide advice on all aspects

of pension law, to advise on the establishment of funds,

benefit design, fund governance and investment, and to

provide high quality training on pension law, investment

and governance to pension funds, asset managers and

others. A number of our lawyers are also themselves

independent trustees on a number of pension funds in

South Africa. Collectively our team possesses a unique

and significant depth and breadth of experience and

knowledge. Members of the Bowman Gilfillan Pension

Law team have won the Principal Officers’ Association

Imbasa Yegolide ‘Law Firm of the Year’ award in

South Africa for their work in pension law for the last

consecutive five years since the inception of the awards.

Pension Funds in Africa

In 2014 the Pensions and Investment Law teams of the Bowman Gilfillan Africa Group hosted a conference on Pension Funds Investing in Africa: From ‘Why’ to ‘How’. It was the first such conference in Africa hosted and run by specialist pension and investment lawyers. The conference was attended by 180 delegates from various countries. It brought together representatives from some of the largest pension funds in Africa, asset managers, investment consultants, advisers and product providers, to explore the role and opportunities for pension funds as institutional investors in Africa as well as the legal issues, transactional realities and risks of investing or creating products in Africa - and how to deal with these.

This publication was first prepared for, and launched

at, that conference. Its purpose is to provide readers

with a broad overview of aspects of the pension

landscape in the eighteen African countries that it

surveys. It assist the reader to get a sense of how

the pension landscape in one country is similar to,

and different from, other countries in Africa and

also provides investors, service providers, employers

and product providers with information relevant to

countries in which they seek to operate.

This publication has been prepared in collaboration

with our associate firms in Botswana (Bookbinder

Business Law), Kenya (Coulson Harney Advocates),

Madagascar (John W Ffooks & Co), Tanzania (East

African Law Chambers), Uganda (AF Mpanga

Advocates) and our relationship firm in Nigeria (Udo

Udomo and Belo-Osagie) as well as other firms in

Africa. The contact details for each of the firms are set

out at the end of the relevant country section.

This publication does not purport to provide legal

advice in relation to any aspect of pension or

investment law in any of the countries dealt with. It

is not to be regarded as a substitute for legal advice

that is pertinent to the particular needs of a client at a

particular point in time.

In terms of section 49(2)(k) of the NBFIRA Act a

pension fund administrator falls within the category of

prudentially regulated non-bank financial institutions

and is required to adhere to any prudential rules that

may be prescribed by the NBFIRA.

Board notices, directives, prudential rules as well as

other information can be obtained on the NBFIRA’s

website at www.nbfira.org.bw.

4. IS THERE A STATUTORY OR COMMON LAW OBLIGATION ON EMPLOYERS TO CONTRIBUTE TO A MANDATORY BASIC NATIONAL SOCIAL SECURITY SCHEME, AND/OR A MANDATORY, PRIVATELY MANAGED OCCUPATIONAL RETIREMENT FUNDS FOR EMPLOYEES?

There are no statutory obligations on employers

to contribute to any retirement fund on behalf of

employees. Employees may be required in terms of their

conditions of employment, as opposed to statutory

obligation, to become members of retirement funds.

Section 28 of the Employment Act, 2008 as amended

[47:01] obliges employers to pay a severance benefit to

employees for each continuous period of 60 months of

employment. The obligation to pay a severance benefit

is waived if the employee is entitled to a pension or

gratuity as a condition of his or her employment.

This waiver operates as an incentive for employers to

contribute to a voluntary retirement fund on behalf of

their employees.

5. ARE THE RETIREMENT FUNDS TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Registered pension plans may be either defined

benefit or defined contribution funds. Provident plans

operate on a defined contribution basis. However,

due to the high risk associated with defined benefit

funds, funds in Botswana are typically constituted

as defined contribution funds. In 2001 the Botswana

Public Officer Pension Fund converted from a defined

benefit fund to a defined contribution fund. The

majority of private sector retirement funds are defined

contribution funds.

6. ARE THE RETIREMENT FUNDS TYPICALLY MULTI-EMPLOYER UMBRELLA FUNDS OR EMPLOYER SPECIFIC FUNDS?

Funds in Botswana are typically employer specific

funds. As at 31 March 2013, there were 95 active

stand-alone funds of which five were umbrella funds.

The umbrella funds consist of several small sized funds

which are pooled for administrative purposes.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, BOTSWANA, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

Unless it is part of the employee’s conditions of

employment, or the employer is obliged to enrol that

employee in an industry-specific fund, there is no

such obligation.

8. IS THERE A DISPUTE RESOLUTION FORUM SET UP IN TERMS OF ANY RETIREMENT FUND LEGISLATION, OR OTHERWISE, AIMED AT RESOLVING DISPUTES BETWEEN EMPLOYERS, ADMINISTRATORS AND MEMBERS? IF SO, HOW DOES THIS FORUM OPERATE?

There is no statutorily created dispute resolution

forum. However the Pension and Provident Funds Act

provides that the rules of a fund must provide for the

manner in which any dispute between the fund and

any member, or any person whose claim is derived from

a member, shall be settled.

RETIREMENT LANDSCAPE

1. WHAT ARE THE PRIMARY PIECES OF LEGISLATION THAT GOVERN RETIREMENT FUNDS AND INVESTMENTS BY RETIREMENT FUNDS?

The establishment, operation and licensing of both

“private sector funds” and “public sector funds”

(such as the Botswana Public Officers Pensions Fund)

is governed by the Non-Bank Financial Institutions

Regulatory Authority Act [Cap 46:08] (“NBFIRA Act”)

and the Pension and Provident Funds Act [Cap 27:03]

(“Pension and Provident Funds Act”). In addition,

all retirement funds are subject to laws of general

application, such as the Income Tax Act [Cap 52:01].

2. WHO IS THE INDUSTRY REGULATOR?

The Non-Bank Financial Institutions Regulatory

Authority (“the NBFIRA”) regulates and oversees a

wide variety of industries including retirement funds.

The NBFIRA is an independent institution established

by the NBFIRA Act to foster the safety and soundness

of non-bank financial institutions; highest standards

of conduct of business by such financial institutions;

fairness, efficiency and orderliness of the non-bank

financial sector; stability of the financial system;

and reduction and deterrence of financial crime.

Certain service providers to retirement funds, such as

administrators and asset managers, for example, are

also regulated by the NBFIRA.

3. DOES THE REGULATOR ISSUE CIRCULARS, DIRECTIVES, BOARD NOTICES AND/OR GUIDANCE NOTES ON ISSUES RELATING TO FUND ADMINISTRATION AND OPERATIONS? IS THERE A WEBSITE OR CENTRAL PUBLIC REPOSITORY WHERE THE CIRCULARS, DIRECTIVES OR GUIDANCE NOTES CAN BE ACCESSED BY THE PUBLIC?

The NBFIRA Act empowers the NBFIRA to make and

publish directives, circulars and rules for prudentially

regulated non-banking institutions. In terms of section

49 of the NBFIRA Act such institutions include pension

and provident funds, as well as the individual trustees

of such funds. It also includes other institutions such

as collective investment schemes (and the trustees of

such schemes, pension fund administrators, insurers,

investment advisers and others).

Some of the issues that a prudential rule can deal

with include (but are not limited to) ‘fit and proper’

requirements for ‘controllers’ (which include trustees

of retirement funds) and managers of prudentially

regulated non-bank financial institutions; the

governance of such institutions; capital and

liquidity requirements; valuation requirements and

methods; standards of business conduct; compliance

requirements for controllers of non-bank financial

institutions; the use by non-bank financial institutions

of financial instruments (including derivatives) and off-

balance sheet transactions; insurance arrangements;

outsourcing and risk management.

Botswana

BOOKBINDER BUSINESS LAW

Member of Bowman Gilfillan Africa Group

4 5

FUND GOVERNANCE AND ADMINISTRATION

9. WHICH IS THE ENTITY RESPONSIBLE FOR FUND GOVERNANCE?

Retirement funds are separate from the participating

employers in the fund, or from the sponsors who

establish the fund. A fund’s board of trustees is

primarily responsible for fund governance. The NBFIRA

as a supervisor has adopted a risk-based supervision

approach, and fund governance has become central

to deciding whether or not an institution should be

closely monitored by the NBFIRA. This means that the

stronger the governance of the fund, the better the risk

control environment and consequently less monitoring

by the NBFIRA.

10. WHAT ARE THE LEGAL REQUIREMENTS (IF

ANY) REGARDING THE COMPOSITION OF THE FUND’S GOVERNING BODY (FOR ExAMPLE, EQUAL REPRESENTATION FOR EMPLOYER AND EMPLOYEE)?

The Pensions and Provident Funds Act does not legislate

the composition of the board of trustees. Regulation

11 of the Pension and Provident Funds Regulations

requires that the fund rules define the categories

of people that are eligible for appointment to the

board. Therefore there is freedom on the part of the

fund to define composition of the board. According

to a NBFIRA official, currently, the typical board

composition is 50-50 representation for employer and

employees. However there are proposed legislative

amendments before Parliament that once passed will

oblige the board to also have independent trustees

appointed to the board. It is proposed that of the total

number of trustees on the board, 40% should consist

of independent trustees. Sections 14 and 15 of the

Pension and Provident Funds Act require that the rules

of the fund also provide for a Public Officer and for the

appointment of an auditor and actuary.

11. ARE THERE ANY LEGISLATIVE OR REGULATORY INITIATIVES THAT HAVE BEEN PUT IN PLACE, OR ARE PLANNED, TO STRENGTHEN THE GOVERNANCE OF RETIREMENT FUNDS IN YOUR COUNTRY (E.G. COMPULSORY TRUSTEE TRAINING; SUITABILITY OR ‘FIT AND PROPER’ CRITERIA FOR FUND TRUSTEES; RISK MANAGEMENT AND SO ON)?

Circular Issue No.1 of 2013 prescribes that with the

introduction of the risk-based supervision, each fund

must appoint a Risk Officer whose function includes

the assessment and evaluation of potential risks facing

pension funds and the identification of risk mitigating

strategies to be applied. The Risk Officer reports to the

board of trustees. In addition each fund is to appoint

a Compliance Officer who is accountable for the

statutory compliance within the fund.

In addition, Pensions Prudential Rules PFR10 requires

that boards put in place the following:

◾ Code of Conduct

◾ Performance assessments of, and by, the board

◾ Appointment of service provides

◾ Risk management policy

◾ Communication policy

◾ Investment policy

A circular on the new ‘fit and proper’ requirements for

controllers (which include the trustees of funds) has

also recently been issued.

12. ARE MOST RETIREMENT FUNDS SELF-ADMINISTERED OR ARE THEY ADMINISTERED BY THIRD PARTY SERVICE PROVIDERS?

The majority of retirement funds are administered by

third party service providers.

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE TO OPERATE IN BOTSWANA?

A pension fund administrator must be licensed in terms

of section 43 of the NBFIRA Act. That section requires

that an application must be submitted in the prescribed

form to the NBFIRA, which will not issue a license

unless satisfied that the applicant-

◾ will carry on the activities to be covered by the

licence with integrity, prudence and professional

skill;

◾ will maintain a sound financial position and not

cause or promote instability in the financial system;

and

◾ otherwise meets and will continue to meet the

requirements of the financial services laws.

A pension fund administrator currently pays a licensing

fee of P200.00 and a supervisory levy of P200.00.

In addition, P30.00 is levied from each member of

the pension fund at the end of the financial year as a

management fee.

14. WHAT ARE THE PRIMARY PIECES OF LEGISLATION GOVERNING INVESTMENTS BY RETIREMENT FUNDS? ARE RETIREMENT FUNDS PROHIBITED FROM INVESTING IN ANY SPECIFIC ASSET OR ASSET CLASS?

The Pension and Provident Funds Act prohibits both

private and public sector funds from investing or

lending money belonging to the fund outside Botswana

without the prior written consent of the NBFIRA.

However the prohibition does not apply to an external

fund which has less than ten Botswana members.

Circular Issue No 1 of 2013 sets out the kinds of assets

that may be held by a pension fund together with limits

in order to determine when there are excess assets.

The circular also requires that the board of trustees of

the fund must have a written investment policy which

must also be submitted to the NBFIRA for approval.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS?

Asset managers and insurers must be licensed in terms

of section 43 of the NBFIRA Act to operate as service

providers to retirement funds. They are required to

submit applications in the prescribed form together

with proof of payment of prescribed fees. Annual

renewal fees are payable in certain circumstances.

Asset managers and insurers are also required to adhere

to the prudential rules prescribed by the NBFIRA in

terms of section 50 of the NBFIRA Act.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN BOTSWANA?

Some of the challenges perceived by different

stakeholders, and in particular the NBFIRA, in the

retirement fund industry include the following:

◾ Limited knowledge of the requirements of the

NBFIRA Act, the Pension and Provident Funds Act

and its regulations which leads to issues of non-

compliance;

◾ Regulatory non-compliance, for example late

submission of annual returns; late notification and

submission of rule amendments despite the fact

that section 8 of the Pension and Provident Funds

Act stipulates that no rule changes will be valid

unless approved by the NBFIRA; and the failure

or late notification of changes to the controllers

(which includes trustees).

BOOKBINDER BUSINESS LAW

9th Floor, iTowers North, Lot 54368,

CBD Gaborone, Botswana

6 7



Public pensions are provided through three mandatory

social insurance schemes (“SIS”) namely, the

Government Employees Pension Fund, the Pension

Fund for Military Personnel, and the Public and Private

Enterprises Employees’ Pension Fund. The SIS is mainly

regulated by the following four statutes:

◾ Law 79 for 1975 which governs the establishment

and operation of SIS for all employees in the public

and private sector;

◾ Law 108 for 1976 which governs the establishment

and operation of SIS for employers and self-

employed persons;

◾ Law 50 for 1978 which governs SIS for Egyptians

working abroad; and

◾ Law 112 for 1980 which governs social insurance

for casual and informal workers.


The Ministry of Insurance and Social Affairs governs

the SIS. The National Social Insurance Authority is

responsible for managing the pension and insurance

system of both the public and private sector and the

Egyptian Insurance Supervisory Authority supervises

private pension schemes and oversees the licenses

issued to private schemes. The Ministry of Finance

(http://www.mof.gov.eg) provides general supervision.


The Egyptian Insurance Supervisory Authority (“the

EISA”) issues notices, guidance notes and legislation on

its website which can be obtained on the EISA’s website

at www.eisa.gov.eg. Further information can also be

obtained on the National Social Insurance Authority’s

website at www.nosi.gov.eg as well as the Minister of

Finance’s website at www.mof.gov.eg.


The contribution to the social security system is

mandatory for wage workers in Egypt but voluntary

for non-wage workers, i.e. employees and the self-

employed.

5. ARE RETIREMENT FUNDS IN EGYPT TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Egyptian public pension schemes operate as defined

benefit schemes which are largely financed on a ‘pay-

as-you-go’ principle. The majority of private pension

schemes also operate as defined benefit schemes, whilst

only a small minority operate as defined contribution

schemes.

Egypt

BOWMAN GILFILLAN


6. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, EGYPT, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

Law 79 of 1975 automatically provides coverage to

foreign nationals that have been working on a contract

basis in Egypt for a year or more. This is conditional on

there being a reciprocity agreement between Egypt

and the foreign national’s country.


The Cairo Regional Centre for International Commercial

Arbitration has rules for mediation and conciliation,

but these have no mandatory application and are

applicable only if the parties agree to this. Otherwise

disputes are dealt with through the courts where

applicable.



The National Organisation for Social Insurance takes

on the responsibility for managing SIS’s which includes

the Government Employees Pension Fund, Pension

Fund for Military Personnel and the Public and Private

Enterprises Employees’ Pension Fund. Private pension

funds have boards of directors.

9. WHAT ARE THE LEGAL REQUIREMENTS (IF ANY) REGARDING THE COMPOSITION OF THAT ENTITY (FOR ExAMPLE, EQUAL REPRESENTATION FOR EMPLOYER AND EMPLOYEE)?

The boards of directors of private pension funds are

elected by the scheme members. If an employer partly

or fully funds a pension scheme then the employer can

also nominate a member of the board.

RETIREMENT REFORM

10. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN EGYPT?

Proposed draft legislation requires the governing board

of directors of private pension funds to acquire

higher levels of expertise in the management of

pension schemes, especially in relation to the asset

management process.

Bowman GilfillanJohannesburg165 West Street, Sandton,

Johannesburg, South Africa

Cape Town22 Bree Street, Cape Town

South Africa

8 9


Under the National Pensions Act, employers in both

private and public sectors are obliged to contribute

to the basic national social security scheme and the

occupational pension scheme on behalf of all its

employees. An employer is required to deduct 5% of

the salary of an employee at the end of the month

and, in addition, the employer is obliged to pay in

respect of each employee a contribution of 13.5% of

the employee’s salary. These amounts must be paid to

the mandatory schemes on behalf of the employee as

follows:

◾ 13.5% to the mandatory Tier 1 basic national social

security scheme; and

◾ 5% to the Tier 2 occupational pension scheme.

5. ARE THE RETIREMENT FUNDS IN GHANA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

In Ghana all the pension funds are defined contribution

funds.

6. ARE THE RETIREMENT FUNDS TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

The Tier 1 basic national social security scheme

may be classified as a multi-employer fund as all

employers in Ghana must contribute to it. In respect

of Tier 2 and Tier 3 Pensions, an employer must have

an employee population of more than 1000 or the

monthly contributions must exceed GHS 3000 before

it is able to form its own employer-sponsored scheme

otherwise the employer is required to join a master

trust scheme which is a multi-employer fund. Typically

most employers are members of a master trust scheme

or multi- employer fund.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, GHANA, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

The National Pensions Act applies to every employee,

including foreign employees, employed in an

establishment in Ghana. An employer is obliged to

contribute to the Tier 1 mandatory basic national

social security scheme and the Tier 2 occupational

pension scheme on behalf of its foreign employees.

Foreign employees may claim all accrued benefits on

permanent emigration from Ghana.


The National Pensions Act establishes a Pensions

Adjudication Committee (“the Adjudication

Committee”) which is empowered to hear and

determine petitions or complaints by aggrieved

members of a scheme or any petitions or complaints

referred to it by the board of the NPRA. The

Adjudication Committee consists of seven members,

three of whom constitute a panel for the determination

of a petition or a complaint. The board of the NPRA

can also hear a petition. An employee or beneficiary

of a scheme who is dissatisfied with a decision of the

trustees, pension fund manager or custodian may

request the board in writing to review the decision.

A copy of the request will be served on the relevant

trustee, pension fund manager or custodian. The

board is required to conduct proceedings in a manner

that avoids delays in the resolution of disputes and to

dispose of any matter before it within three months

from the date of receipt of the request. A settlement

agreed to by the parties is binding on them and is

enforceable by the courts.



Pension funds are primarily governed by:

◾ the National Pensions Act, 2008 Act 766 (“the

National Pensions Act”) and the Occupational and

Personal Pension Schemes (General) Regulations,

2011 (LI 1990) - together referred to as “the Pension

Regulations”; and

◾ the National Social Security Scheme Regulations,

2011 (L.I. 1989).

The National Pensions Act establishes a three tier

pension scheme comprising the following:

◾ Tier 1 Pensions: This is a basic national social

security scheme which is mandatory and is

managed by the Social Security and National

Insurance Trust (“SSNIT”). The SSNIT is a statutory

corporation established under the National

Pensions Act;

◾ Tier 2 Pensions: This is a fully-funded and privately

managed occupational pension scheme which is

mandatory and managed by a board of licenced

trusteed; and

◾ Tier 3 Pensions: This is a voluntary fully-funded

provident fund and personal pension scheme

privately managed by a board of licenced trustees.

A personal pension scheme is a pension scheme to

which a member contributes personally to provide

benefits which are based on a defined contribution

formula.

The above pension schemes are not applicable to the

Armed Forces who have their own pension scheme

established by other statutes. Some sectors of the Civil

Service (i.e. Government employees, and particularly

those in the security services) have pension schemes

established under various other statutes.


The National Pensions Regulatory Authority (the

“NPRA”) is established by the National Pensions Act

to be the regulator of the pension industry. Certain

service providers to the pension funds such as pension

fund managers and pension fund custodians are also

regulated by the Securities and Exchange Commission

(“SEC”).


The National Pensions Act empowers the NPRA to issue

guidelines, codes of practice, notices and directives

on issues relating to pensions administration in Ghana.

Guidelines, notices and directives may be published in

the gazette or other print media as may be determined

by the board of the NPRA. Guidelines, notices,

and directives, as well as other information can be

obtained on the NPRA’s website at www.npra.gov.gh.

Guidelines, rules, notices or directives issued

by the SEC are also binding on pension fund managers

and fund custodians.

Ghana

BENTSI-ENCHILL, LETSA & ANKOMAH

10 11

Under the Pension Regulations, a trustee is required to

file a return within six months after each financial year.

Where the trustee is an individual, the performance

guarantee must be attached to the return.

The NPRA also periodically reviews the investment

policy formulated by trustees for the schemes being

managed by them. Trustees, pension fund managers

and custodians are required to have qualified

personnel, be registered and must be independent of

each other. Reporting obligations of trustees, fund

managers and custodians under the pension regulations

also strengthens the governance of pension funds.

12. ARE MOST RETIREMENT FUNDS SELF-

ADMINISTERED OR ARE THEY ADMINISTERED BY THIRD PARTY SERVICE PROVIDERS?

The majority of retirement funds are administered

by third party service providers. However, some

employer-sponsored schemes of large companies are

self-administered.

13. ARE THERE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN YOUR COUNTRY?

A person must be licenced and approved by the NPRA

as a trustee in order to be a fund administrator. The

Pension Regulations and NPRA Guidelines contain

eligibility criteria and other conditions for the approval

of a trustee.


The Pension Regulations regulate investments by

pension funds and deals with amongst other things,

the type of instruments in which pension funds can

invest and spreading of the fund’s assets in different

investment vehicles. Limits of investments are provided

in NPRA’S Guidelines.

For Tier 1 Pension, the SSNIT may invest the pension

fund assets in investments approved by its board

of trustees. The SSNIT may only invest outside Ghana

if this is approved. The NPRA may recommend to

the President, through the Minister of Finance, the

approval of an external investment of pension fund

assets. The amount to be invested externally may not,

however, exceed the percentage of the total available

funds to be invested as determined by the NPRA. No

such recommendations have been made yet.

The National Pensions Act does not prohibit pension

funds from investing in any specific asset or asset class

but places restrictions on investment in specific asset

classes. In this regard amongst others:

◾ A trustee or a pension fund manager cannot invest

pension fund assets in the shares or any other

securities issued by the trustee or pension fund

manager or custodian, or a shareholder of the

trustee or pension fund manager or custodian.

◾ A privately-managed pension fund is not permitted

to hold more than 10% of any class of security

issued by a single issuer, or have more than

10% of its total assets in the securities issued

by a single issuer other than that permitted for

government and other public securities. Short sales

or borrowing for investment purposes are also not

permitted.

◾ A trustee is prohibited from:

◾ entering into a repurchase agreement with the

funds of the scheme;

◾ entering into underwriting or sub–underwriting

contracts in relation to the subscription or

purchase of any investment;

◾ ending securities held in respect of the scheme;

◾ using the funds of the scheme to acquire

financial futures contracts or financial option

contracts;

◾ making any investments that will result in the

trustee, pension fund manager or the scheme

gaining management control of a company in

which the investment has been made;

◾ subjecting the scheme assets to any

encumbrance; or

◾ using the scheme assets for any other investment

practices that may be prohibited by the NPRA.



Trustees licenced and approved by the NPRA are

primarily responsible for fund governance in Tier 2

and Tier 3 funds. A person seeking to be appointed

as a trustee must apply to the NPRA in terms of the

prescribed process and pay a prescribed fee. The

trustees are required to appoint fund managers,

custodians and other service providers for the

management of the fund. The Tier 1 basic national

social security pension scheme is managed by the

board of trustees of SSNIT.


With regards to the Tier 1 basic national social security

pension scheme, the board of trustees is appointed by

the president of Ghana in consultation with the Council

of State. The board of trustees comprises:

◾ a chairperson;

◾ two persons nominated by the President, at least

one of whom is a woman;

◾ two representatives of Employers’ Associations;

◾ four representatives of Organised Labour;

◾ a representative of the National Pensioners’

Association;

◾ a representative of the Ministry of Finance not

below the rank of a Director;

◾ a representative of the Security Services (Ghana

Armed Forces exempted); and

◾ the Director-General of the Trust.

With regards to Tier 1 and Tier 2 Pensions, the National

Pensions Act requires that at least a third of the

total number of trustees must be member-nominated

trustees. In terms of the National Pensions Act, where

a company is a trustee of an occupational pension

scheme and each trustee of the scheme is a company,

the company must ensure that within a reasonable

period after the commencement date, arrangements

are in place which provide for at least one-third of

the total number of directors of the company to be

member-nominated directors and implement those

arrangements. If all the trustees are individual persons,

at least one of those persons must be an independent

trustee. Where the trustees comprise both individuals

and companies, each of the individual persons must

either be an independent trustee or a member of the

scheme. Once the members have nominated trustees,

those trustees are appointed by the employer.


Trustees are required within six months of appointment

to obtain the relevant trustee training from training

institutions in relation to courses approved by the

NPRA. These are to be updated by the NPRA through

its guidelines. The Pension Regulations also contain

eligibility criteria (fit and proper requirements) for

trustees to satisfy before being approved as trustees

and various provisions to deal with risk management.

For example, trustees are required to execute

performance guarantees prior to being approved as

such. The National Pensions Act requires an approved

trustee (a trustee licensed by the NPRA) of a registered

scheme, who is an individual, to maintain a valid

performance guarantee that is satisfactory to the

NPRA. The performance guarantee must:

(a) Be issued in writing by an authorised financial

institution or authorised insurer;

(b) Impose a continuing obligation on the authorised

financial institution or authorised insurer to

indemnify the scheme again any loss sustained by

the scheme or the scheme members as a result of:

(i) A failure by the individual trustee to perform

a duty imposed on trustees by or under the

Pensions Regulations; or

(ii) A breach of any fiduciary duties on the part

of the individual trustee.

The performance guarantee must be govered by

the laws of Ghana and may contain a power by

the guarantor to terminate its obligation under the

guarantee by giving not less than 30 days written

notice to the NPRA and to the individual concerned

before terminating the obligation.

12 13

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN GHANA?

Asset managers and insurers are not permitted

to provide fund manager and custodial services

respectively to pension funds unless they are

registered with the NPRA. Amongst other conditions

to be met for registration to be approved, these

service providers must be licensed by the SEC.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN GHANA?

Some of the challenges observed by different

stakeholders in the retirement fund industry include

the following:

◾ a restrictive investment regime for pension funds in

relation to the limits of investments;

◾ the need to include the information sector in the

pension fund industry in order to ensure retirement

income security for people in the informal sector.

The concerns are that the system of tax collection

in the informal sector is not efficient and therefore

tax incentives given under the National Pensions

Act for pension contributions is ineffective to

attract the informal sector;

◾ concerns about inadequacy of retirement benefits

from the national social security pension;

◾ concerns about the need for capacity building

in the industry (both for the NPRA and service

providers); and

◾ concerns that the current fees stipulated by the

Regulator to be charged by service providers are

inadequate to cover actual costs of administration.

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN GHANA?

The pension industry has recently undergone reform

with the promulgation of the Pension Regulations

and the introduction of the new pension system.

Discussions with the NPRA indicate that proposals on

capacity building in the industry are its present focus

to ensure the proper implementation of the Pensions

Regulations. The NPRA is also preparing proposals

to address the concerns referred to above, amongst

others. For example, with regards to the restriction on

the investment regime, the NPRA has indicated that

it aims to undertake a survey to assess the investment

regime in order to be better informed prior to

introducing any changes. There are no indications as to

timelines in this regard.

BENTSI-ENCHILL, LETSA & ANKOMAH

1st Floor, West Wing,

Teachers’ Hall Complex

4 Barnes Close, Education Loop

(Off Barnes Road)

Adabraka, Accra

PO Box 1632, Accra, Ghana



Retirement schemes are governed by following:

◾ Law No. 99-477 dated August 2, 1999 relating to

social security code amended by Order No. 2012-03

dated January 11, 2012;

◾ Order No. 2012-303 dated April 4, 2012 relating

to the organization of pensions schemes and its

implementing Decree No. 2012-365 dated April 18,

2012 ;

◾ Decree No. 2000-487 dated 12 July 2000 relating

to the creation of the Institution de Prévoyance Sociale dénomée Caisse Nationale de Prévoyance Sociale

(“the CNPS”);

◾ Decree No. 476 dated 2 August 1999 relating to the

organization of social security institutions; and

◾ Decree No. 2012-367 dated 18 April 2012, relating

to the incorporation of the Institution de Prévoyance Sociale dénommée Caisse Générale de Retraite des Agents de l’Etat (“the CGRAE”)


The CNPS regulates and oversees the retirement fund

industry in the private sectors. The CNPS falls under

the supervision of the Ministry of Family, Women,

Health and Social Affairs and the Ministry of Finance.

The CGRAE regulates the retirement industry in the

public sector (for civil servants). It falls under the

supervision of the Ministry of Solidarity, Social Security

and Handicapped.


The CNPS and the CGRAE may issue board notices,

circulars, directives, or guidance notes. Some

regulations, decrees, directives, or circulars can be

obtained at the following websites:

◾ http://www.sgg.gouv.ci/index.php

◾ http://www.cgrae.ci/index.php


Employees in the private sector are required to be

registered at the CNPS and to contribute to the

private retirement funds. Employees in public sector

are required to be registered at the CGRAE and to

contribute to the public retirement funds.

5. ARE RETIREMENT FUNDS IN IVORY COAST TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Retirement funds in Ivory Coast are classed as defined

benefit funds.

Ivory Coast

JOHN W FFOOKS & CO


14 15

6. ARE RETIREMENT FUNDS TYPICALLY MULTI- EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

All private sector employers and employees contribute

to one private mandatory fund.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, IVORY COAST, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

In the case of secondment, there is no such

obligation unless it is part of the employee’s

conditions of employment.

In the case of permanent employees, the registration

of the employees at the CNPS is required


There is so specialised dispute resolution forum for

retirement fund disputes. However, a dispute in relation

to a retirement fund can be settled before the

Labour Court.


9. WHICH IS THE ENTITY RESPONSIBLE FOR OVERSEEING THE FUND GOVERNANCE OF RETIREMENT FUNDS?

The CNPS is responsible for the management of funds

in the private sector. The CGRAE is responsible for the

management of funds in the public sector. Within each

regulatory authority there exists a financial direction

department in charge of the management of monies.

10. ARE MOST RETIREMENT FUNDS SELF- ADMINISTERED OR ARE THEY ADMINISTERED BY THIRD PARTY SERVICE PROVIDERS?

Retirement funds are administered by the CNPS (in the

private sector) and the CGRAE (in the public sector)

i.e self - administered.

11. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN YOUR COUNTRY?

Administrators of non-mandatory saving schemes,

operated by banks or insurance companies, would have

to obtain the joint authorisation of the Ministry of

Labour, Ministry of Social Affairs, Ministry of Finance

and Economy in order to operate in Ivory Coast. Such

authorisation is issued through Decree.


There is no specific legislation governing investment

by retirement funds in Ivory Coast.

13. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN IVORY COAST?

An asset manager would have to obtain the joint

authorisation of the Ministry of Labour, Ministry of

Social Affairs, Ministry of Finance and Economy in

order to operate in Ivory Coast. Such authorisation is

issued through Decree.

RETIREMENT REFORM

14. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN IVORY COAST?

Low coverage as only 10% of employees are registered

at the CNPS. The pensions paid by the existing pension

funds are often too low.

JOHN W FFOOKS & CO

Immeuble Assist - 1st Floor

Ivandry

Antananarivo 101

Madagascar



The main statute governing retirement funds and

investments by retirement funds is the Retirement

Benefits Act, 1997. All retirement benefits schemes

must be registered and administered in accordance

with the provisions of the Retirement Benefits Act.

Under the old National Social Security Fund Act

(Chapter 258 of the Laws of Kenya) (“the former NSSF

Act”) there was a mandatory provident fund, the

National Social Security Fund (“NSSF”), whose benefits

were payable upon retirement. This regulated the

formal sector employees’ contributions to the NSSF and

investments by the NSSF .

With effect from 31 May 2014 a new National Social

Security Fund Act, 2013 (“the new NSSF Act”)

came into effect. It establishes a new National Social

Security Fund (“the new NSSF ”) and repeals the

former NSSF Act. The new NSSF Act establishes

a provident fund and a pension fund, and governs

members’ contributions into the funds. All members

making mandatory contributions to the former

NSSF Fund became members of the pension fund under

the new NSSF Act when the new NSSF Act came into

effect on 31 May 2014.

The new NSSF Act provides for mandatory

contributions by employers and employees to the

pension fund. Contributions to the provident fund on

the other hand are made by:

◾ employers and employees, although the employer

may choose to pay part of its NSSF contributions

into a contracted-out scheme in accordance with

the new NSSF Act as discussed below;

◾ self-employed persons who voluntarily register to

be members of the NSSF ; and

◾ any other person who does not meet the criteria to

be a member of the pension fund.

The benefits payable from the funds are usually payable

upon retirement, death, disability, emigration and

withdrawal.

The full implementation of the new NSSF Act has,

however, been delayed due to certain legal challenges

pertaining to:

◾ the establishment of the pension fund and

provident fund discussed above;

◾ the registration of employees and employers with

the new NSSF ;

◾ mandatory contributions to the new NSSF ; and

◾ the application of the provisions of the Retirement

Benefits Act.

The matter is yet to be heard and finally determined by

the High Court.

In addition to the above there is also a retirement

benefit scheme for civil servants established and

governed by the Public Service Superannuation Scheme

Act, 2012.


The Retirement Benefits Authority (“RBA”) regulates,

supervises and promotes retirement benefits schemes,

as well as develops the retirement benefits sector in

Kenya. The RBA also advises on national policy in

relation to retirement benefits schemes. The RBA is

established under the Retirement Benefits Act.

Kenya

COULSON HARNEY


16 17


The RBA issues practice notes and guidelines on

implementation of the provisions of the Retirement

Benefits Act and its regulations. The RBA specifies in

the guidelines and practice notes whether they shall

be binding or whether they shall act as mere guides.

The RBA also prepares annual reports on the pension

industry in Kenya as well as the legal changes effected

in the industry. The report also provides the fund

value of retirement benefit schemes in the country,

policy recommendations on the way forward, and

analyses the interplay between pension schemes and

the Kenya’s economy.

The Retirement Benefits Act and its regulations,

policies, guidelines and practice notes can be

accessed on the RBA website (www.rba.go.ke/

regulatory-framework). They can also be accessed at

the RBA offices.


Both the former and new NSSF Act mandate all formal

sector employees (other than the persons exempted

under the respective NSSF Acts) to make specified

monthly contributions to the (NSSF ).

The former NSSF Act set a monthly flat contribution

rate for employees. Employers contribute additional

amounts to voluntary private pension schemes. The

new NSSF Act pegs the contributions as a percentage

of the pensionable earning.

Under the new NSSF Act, the contributions are two-

tiered. Tier I contributions are pegged on a lower

limit of KES 6,000 and must be paid to the new NSSF.

Tier II contributions pertain to earnings between

the lower limit and the upper limit (KES 18,000). An

employer can contract-out their Tier II contributions

(“opting-out”) to a private retirement benefits scheme

that meets the Reference Scheme Test as set out in

the new NSSF Act.

Under the new NSSF Act, a Reference Scheme is an

occupational retirement benefits scheme, including an

umbrella retirement benefits scheme, or an individual

retirement benefits scheme, which:

• is registered by the RBA and has a valid registration

certificate;

• is registered with the Kenya Revenue Authority as

an exempt scheme;

• complies with the requirements for a defined

contributions scheme and a defined benefits

scheme as set out in the new NSSF Act;

• maintains an accurate record of protected rights

in the manner prescribed by the RBA;

• complies with the Investment Guidelines in the

Retirement Benefits Act; and

• complies with any prescribed requirements by the

RBA.

For public service employees, membership of the civil

service pension scheme is mandated by the Public

Service Superannuation Act. Under this scheme, only

the government makes contributions in respect of

each member.

5. ARE RETIREMENT FUNDS IN KENYA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Retirement funds in Kenya are typically defined

contribution schemes.

Most new private retirement benefits schemes are

established as defined contribution schemes. Many old

retirement benefits schemes that were initially set up

as defined benefits schemes are now opting to convert

to defined contribution schemes. The RBA has issued

regulations and prudential guidelines to govern such

conversions.

The mandatory NSSF scheme under both the current

and new NSSF Acts operates as a defined contribution

scheme. The current and the new NSSF Act specify the

contributions to be made to the NSSF Fund.

On the other hand, the civil service pension scheme

operates as a defined benefit scheme. Under this

scheme, the government makes contributions to

members’ retirement savings accounts and all benefits

derived from these contributions vest in each member

after a period of five years at the rate of fifty percent

of the accumulated amount, increased by ten percent

for each full year thereafter up to a maximum of one

hundred percent after ten years of service.

These are also individual retirement benefit schemes

established for the benefit of individual beneficiaries

and are typically umbrella funds established by

a sponsor. These are generally defined contribution

schemes.

6. ARE RETIREMENT FUNDS IN KENYA TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

The retirement schemes are largely employer-

specific. Most non-statutory schemes are voluntary

occupational schemes set up by specific employers for

the benefit of their employees. While these schemes

have a relatively low coverage, they record higher

investment returns and turnover than the mandatory

national social security fund.

The RBA is seeking to promote umbrella funds that are

industry-specific. The former NSSF is an umbrella fund

and the new NSSF , when it comes into force, will also

be an umbrella fund.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, KENYA, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

The former NSSF Act exempts employers from making

contributions for persons not ordinarily resident in

Kenya and who are:

◾ employed in Kenya for period not exceeding three

years at any one time, and

◾ liable to contribute to, or are or will be entitled

to benefit from, the social security scheme or

similar body of any other country approved by the

Cabinet Secretary in writing.

The new NSSF Act contains a similar exemption and

provides that such an exempt person shall not be

registered as a member of the new NSSF . However, the

exempt person may nonetheless elect to register as a

voluntary contributor.

Persons exempted from contribution under any

international convention are also exempt from

participation in the NSSF .


The Retirement Benefits Act provides a dispute

resolution procedure which is also incorporated into

the new NSSF Act. Under the Retirement Benefits

Act persons aggrieved by decisions of a manager,

administrator, custodian or trustees of a retirement

scheme can seek recourse from the Chief Executive

Officer of the RBA. However, the person must first

attempt to resolve the dispute internally.

If the internal dispute resolution fails, then the

aggrieved party may make a written complaint to the

RBA through a prescribed complaints form (available

at the www.rba.go.ke website and at the RBA offices).

The RBA will then conduct an investigation, make a

finding on the claim and communicate the decision to

the parties.

A person dissatisfied with the RBA decision may

appeal to the Appeals Tribunal (established under

the Retirement Benefits Act) within thirty days. The

Appeals Tribunal will act as a subordinate court. The

Appeals Tribunal has powers to summon witnesses,

take evidence upon oath or affirmation and call for

the production of books and other documents. It is

also empowered to award costs and a certificate of

costs certified as such and executed in the High Court

is deemed to have the force of a decree of the High

Court. The new NSSF Act provides that any dispute

arising under it should be referred to this Appeals

Tribunal.

18 19



Both the current and new NSSF are governed by

a board of trustees, known as the National Social

Security Board of Trustees, established in both NSSF

Acts as a body corporate. Individual retirement

benefit schemes also have their own boards of trustees.

Retirement benefit schemes established under

the Retirement Benefits Act are also required to

have in place custodians, managers, trustees or

administrators, appointed in accordance with their

respective scheme rules and the Retirement Benefits

Act. The Retirement Benefits Act also requires

that external fund managers be vested with the

responsibility of investing scheme funds.


For occupational retirement benefits schemes, which

are retirement benefits schemes established by

employers for the benefit of the employees, the scheme

rules must reflect the following principles:

◾ A defined benefit scheme must have a minimum of

three and a maximum of nine trustees. Employees

must nominate at least one third of the trustees,

unless the scheme has appointed a corporate

trustee;

◾ A defined contribution scheme shall not have a

minimum of four and a maximum of nine trustees.

Employees and the employer each nominate 50%

of the trustees unless the scheme has appointed a

corporate trustee; and

◾ A scheme or a corporate trust must have on its

board of trustees at least one member who has

been vetted by the RBA to provide trust services.

◾ The NSSF is governed by a board of trustees. The

new NSSF Act constitutes the board of trustees as

follows:

◾ three government representatives;

◾ two nominees of the most representative

employer’s organisation;

◾ two nominees of the most representative workers’

organisation;

◾ three independent persons appointed by the

Cabinet Secretary by virtue of their knowledge and

experience in matters relating to administration

of scheme funds, actuarial science, insurance,

accounting and auditing or law; and

◾ a Managing Trustee as an ex officio member.

11. ARE THERE ANY LEGISLATIVE OR REGULATORY INITIATIVES THAT HAVE BEEN PUT IN PLACE, OR ARE PLANNED, TO STRENGTHEN THE GOVERNANCE OF RETIREMENT FUNDS IN KENYA (E.G. COMPULSORY TRUSTEE TRAINING; SUITABILITY OR ‘FIT AND PROPER’ CRITERIA FOR FUND TRUSTEES; RISK MANAGEMENT AND SO ON)?

The Retirement Benefits Act provides a list of

considerations to be applied when determining the

criteria for suitability of trustees. These include, for

example, financial status and solvency, educational

qualifications, the ability of a person to carry on

regulated activity competently as well as reputation,

character, financial reliability and integrity.

The RBA adopts a risk-based supervision approach

and has issued Supervisory Guideline No 2, which

provides guidance to retirement benefit schemes

on measures to put in place so as to guard against

different types of risk.

The RBA also conducts a five-day training program for

trustees as part of its approval process. This is pursuant

to section 26 of the Retirement Benefits Act which

states that trustees have to be approved by the RBA

before acting as such.


Most voluntary retirement schemes are administered

by third-party service providers. These service

providers must be registered as scheme administrators

by the RBA.

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN KENYA?

The Retirement Benefits Act provides that

administrators must be registered by the RBA. Under

the Retirement Benefits Act a fund administrator must:

◾ be a company;

◾ have a minimum paid-up share capital (including

unimpaired reserves) of KES 10 million; and

◾ have at all times on its board of directors and

within its senior management at least four persons

who are academically and professionally qualified

in matters relating to banking, insurance, law,

accounting, actuarial studies, finance, economics

or investment of scheme funds.


The Retirement Benefits Act governs investments by

retirement benefits schemes. A retirement benefits

scheme and a pooled fund must prepare a written

statement of the principles governing decisions on

investments for the purposes of the scheme or pooled

fund and submit it to the RBA every three years.

This requirement is, however, not applicable to an

approved issuer where investment has been made in

guaranteed funds.

The Retirement Benefits Act also provides Investment

Guidelines which categorise the assets that a scheme or

pooled fund may invest in and sets out the maximum

percentage of the aggregate market value of the

total assets of the scheme or pooled fund that can be

invested into each category of assets, for example:

◾ 90% in Kenya, Uganda or Tanzania government

securities and infrastructure bonds issued by public

institutions and collective investment schemes

incorporated in Kenya, Uganda and Tanzania;

◾ 70% in preference shares and ordinary shares of

companies quoted in a stock exchange in Kenya,

Uganda or Tanzania and collective investment

schemes incorporated in Kenya; and

◾ 30% in immovable property in Kenya and units in

property Unit Trust Schemes incorporated in Kenya

and collective investment schemes in corporate in

Kenya, among others.

Investment in assets which do not fall within the

asset classes provided for in the Regulations requires

approval by the RBA.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN KENYA?

The RBA regulations on managers and custodians

state that a fund manager must be registered by the

Retirement Benefits Authority in order to operate as

such. The licensing requirements under the regulations

are that the entity should be a limited liability company

registered under the Companies Act, with a minimum

paid-up share capital of KES 10m, and that its top

management or board should comprise persons who

are academically and professionally qualified in matters

relating to banking, insurance, law, accounting,

actuarial studies, finance, economics or investment of

scheme funds.

However, where an applicant is already registered as a

fund manager under the Capital Markets Act, then

such registration may be deemed to be a registration

as a fund manager under the Retirement Benefits

Act. This is subject to an agreement made between

the RBA and the Capital Markets Authority. Fund

managers licensed by the Capital Markets are required

to have fulfilled the requirements contained in the

Capital Markets (Licensing) (General) Regulations,

2002. These regulations provide for minimum capital

requirements, composition of the management organ,

and fulfilment of the fit and proper criteria as well as

maintenance of records.

Insurers require licensing by the Insurance Regulatory

Authority under the Insurance Act.

20 21



Retirement funds are governed by Law No. 68- 023

dated December 17, 1968 and Law No. 2005 – 007

dated July 29, 2005. There is no specific legislation in

Madagascar that governs investments by retirement

funds.


The Caisse Nationale de Prévoyance sociale (“the

CNAPS”) regulates and oversees retirement funds in

the private sector. The CNAPS operates under the

joint supervision of the Ministry of Labour and the

Ministry of Finance.

The Caisse de Retraite Civile et Militaire (“the CRCM”)

regulates the retirement funds in the public sector

(for civil servants).


The regulator does not issue circulars, directives, board

notices and/or guidance notes on issues relating to fund

administration and operations. The CRCM does not have

a website. The CNAPS website is http://www.cnaps.mg/

EN/index.php


Employees in the private sector are required to

be registered at the CNAPS and to contribute to the

private retirement funds.

Employees in the public sector are required to

be registered at the CRCM and to contribute to the

public retirement funds.

5. ARE RETIREMENT FUNDS IN MADAGASCAR TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Retirement funds in Madagascar are classed as defined

benefits funds.

6. ARE RETIREMENT FUNDS IN MADAGASCAR TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

There is only one mandatory scheme in the private

sector.

Madagascar

JOHN W FFOOKS & CO


COULSON HARNEY

5th Floor, ICEA Lion Centre, West Wing,

Riverside Park, Chiromo Road,

Nairobi

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN KENYA?



the following:

◾ Low overall coverage of retirement benefits

schemes, especially in the informal sector.

◾ Varied types and levels of income in the informal

sector which makes it challenging to facilitate the

payment of regular contributions into a fund for

them.

◾ Challenges in substantive transition by the various

stakeholders from the former NSSF provident fund

regime to the new tiered pension fund system.

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN YOUR COUNTRY? IF SO, PLEASE BRIEFLY DESCRIBE THESE AND THE FORUM IN WHICH THEY ARE TAKING PLACE.

Efforts are currently underway to implement the new

tiered pension fund system introduced by the new

NSSF Act. In addition, in conjunction with the East

African Community and the World Bank, there is a

current push towards harmonisation of pension laws

within the East African region. This project is still in

its initial phases as the groundwork is being laid and

consultations taking place at a regional level.

22 23

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, MADAGASCAR, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

In the case of secondment there is no such obligation

unless it is part of the employee’s conditions of

employment. In the case of permanent employees, the

registration of the employees at the CNPS is required.


There is no such despute resolution system. However,

a dispute in relation to a retirement fund can be

resolved through:

◾ amicable settlement facilitated by the CNAPS and/

or the Mediature de la République;

◾ the courts (Chambre Administrative of the Supreme

Court).



The CNAPS is in charge of the management of the

mandatory scheme in the private sector. The CRCM is

in charge of the management of the mandatory scheme

in the public sector.

Within each regulatory authority there exists a

‘financial direction department’ in charge of the

management of monies.


The CNAPS’s board is composed of an employer

representative, an employee representative and

representatives from the Ministry of Labour and

Ministry of Finance.

The mandatory scheme in the public sector is managed

by the CRCM. Contributions are held in a special

treasury account controlled by the Minister of Finance.


There are no such initiatives currently.


The retirement funds are self-administered.

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN MADAGASCAR?

Administrators of non-mandatory saving schemes,

operated by banks or insurance companies, are

required to obtain an agrément (approval) from the

Commission de Contrôle de Fonds de Pension in order

to operate in Madagascar.


There is no specific legislation in Madagascar that

governs investments by retirement funds.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN MADAGASCAR?

Asset managers and insurers of non-mandatory

saving schemes are required to obtain an agrément (approval) from the Commission de Contrôle de Fonds de Pension in order to operate in Madagascar.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN MADAGASCAR?

There are concerns about low-levels of retirement

savings and insufficient pensions granted by existing

pension funds.

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN MADAGASCAR? IF SO, PLEASE BRIEFLY DESCRIBE THESE AND THE FORUM IN WHICH THEY ARE TAKING PLACE.

There are no such discussions currently taking place.

JOHN W FFOOKS & CO

Immeuble Assist – 1st floor

Ivandry

Antananarivo 101

Madagascar

24 25



Private and occupational retirement funds are mainly

governed by the Private Pension Schemes Act 2012

and the National Pensions Act 1976.


Approval and supervision of pension schemes has

been shared between the Registrar of Associations

under the Employees Superannuation Fund Act 1954,

the Mauritius Revenue Authority under the Income

Tax Regulations 1996, and the Financial Services

Commission (“FSC”) under the Financial Services Act

2007 and the Trusts Act 2001. Since 2012, the FSC

has become the main regulator of Private Pensions

Schemes.


These can be viewed at the offices of the FSC in

Ebene and online at http://www.fscmauritius.org/legal-

framework/rules-and-regulations.aspx. The Mauritius

Revenue Authority also issues regulations under

the Income Tax Act and these are also accessible

at www.mra.gov.mu.


The Private Pension Schemes Act provides that a

private pension scheme shall prepare, maintain and

from time to time revise a schedule of contributions

showing the rates of contributions payable and the

amounts actually paid towards the scheme by the

sponsoring employer and the members. The national

pension fund established in terms of section 37 of

the National Pensions Act is a mandatory defined

benefit fund covering employees in the private

sector. Excluded from coverage, however are some

employees who earn very low wages and some

workers in the country’s sugar industry. However,

it is not compulsory that an employer participate in

and contribute to a private fund. This would only

happen if the employer elects to become a sponsoring

employer of such a fund.

5. ARE RETIREMENT FUNDS IN MAURITIUS TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

The law provides for both. The current trend is

towards defined contribution funds.

Mauritius

BOWMAN GILFILLAN


6. ARE RETIREMENT FUNDS IN YOUR MAURITIUS TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

Private pension funds are employer specific whereas

the mandatory national pension fund, which is a

defined benefit fund, is a multi-employer umbrella fund

7. IS THERE A DISPUTE RESOLUTION FORUM SET UP IN TERMS OF ANY RETIREMENT FUND LEGISLATION, OR OTHERWISE, AIMED AT RESOLVING DISPUTES BETWEEN EMPLOYERS, ADMINISTRATORS AND MEMBERS? IF SO, HOW DOES THIS FORUM OPERATE

The Private Pension Schemes Act 2012 provides that

any Regulations made under this Act may provide for

the setting up of an arbitration panel to deal

with disputes relating to activities of a private

pension scheme.


8. WHICH IS THE ENTITY RESPONSIBLE OR FUND GOVERNANCE?

The governing body of a pension fund is the entity

primarily responsible for the governance of the

fund. Every pension scheme is also required to be

administered by a pension scheme administrator who

must ensure that the scheme is run in compliance

with relevant legislation and the FSC Rules.


The number of persons on the governing body must

comply with prescriptions made in the FSC Rules from

time to time. In terms of section 5 of the Private Pension

Scheme Governance Rules, 2012 where a governing

body is constituted in terms of section 9 of the Act

then such a body must be made up of three people

who are resident in Mauritius. If a governing body is

constituted in terms of section 12 of the Act, it needs

to be made up of three people, two of which must be

resident in Mauritius.

The governing body is also required to appoint a

chairperson, vice-chairperson and a contact person

and to inform the FSC of these appointments.

10. ARE THERE ANY LEGISLATIVE OR REGULATORY INITIATIVES THAT HAVE BEEN PUT IN PLACE, OR ARE PLANNED, TO STRENGTHEN THE GOVERNANCE OF RETIREMENT FUNDS IN MAURITIUSY (E.G. COMPULSORY TRUSTEE TRAINING; SUITABILITY OR ‘FIT AND PROPER’ CRITERIA FOR FUND TRUSTEES; RISK MANAGEMENT AND SO ON)?

In terms of the Private Pension Schemes Act 2012,

in an attempt to address the regulatory issues

facing pension schemes, the FSC was appointed as

the regulator for the private pension industry in

Mauritius. The role of FSC is to ensure that pension

schemes comply with provisions of the Act which has

as its main objective to maintain a fair, safe, stable

and efficient private pension industry.


The Private Pension Schemes Act 2012specifies that

the pension fund must be administered by a pension

fund administrator. The exception to this is that it can

be administered by its own governing body or long

term insurer, where such persons are so authorised in

terms of the rules and by the FSC.

12. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN MAURITIUS?

A pension fund administrator must be licensed to

operate and an application for licensing an

administrator must be made in terms of the Part VI

of the Financial Services Act. The following persons

may not be appointed as administrators:

◾ a body corporate;

◾ an undischarged bankrupt;

◾ any officer, actuary or auditor of the person whose

license has been suspended, revoked or otherwise

terminated;

◾ a person restrained or disqualified from managing

a company under the Companies Act 2001;

◾ a mortgagee of any property of the person whose


terminated;

26 27

◾ an officer of any body corporate which is a

mortgagee of the property of the person whose


terminated.


The Private Pensions Schemes Act stipulates that

every private pension fund must have a policy in

place that governs the investments of the fund. In

addition to this, the FSC has issued rules on admissible

assets, spreading of risks, the minimum contents of

a written investment policy and the implementation

of investment decisions.

RETIREMENT REFORM

14. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN MAURITIUS?

One of the biggest issues facing Mauritius pension

schemes was the lack of regulatory environment for

private pensions which has been addressed by the

enactment of the Private Pensions Schemes Act 2012.

In addition, the new regulatory and supervisory

framework is driven by international best practices

and principles developed by OECD and IOPS.

BOWMAN GILFILLANJohannesburg165 West Street, Sandton,


Tel +27 11 669 9000


South Africa

Tel +27 21 480 7800

www.bowman.co.za



Retirement funds are governed by the Regulations

on the Establishment and Management of Pension

Funds (“the Regulations”), the General Statute on

Functionaries and Agents of the State Act No. 14 of

2009, the Law on Social Protection No. 4 of 2007 and

the Social Protection Law 5 of 1989.


Retirement funds are supervised by the same entity

that supervises insurance activities. The regulator for

the insurance industry is the Institute of the Insurance

Supervision of Mozambique.


All employees are required to contribute at a rate

of 3% and all employers are required to contribute

at a rate of 4% in respect of each employee to the

National Savings Scheme. However, there is no

obligation on employers to implement a private

scheme or Social Complimentary Fund, as it is referred

to in Mozambique. If an employer provides such a

fund, it is up to it and the employee to determine

what contribution it and the employee will make to

the fund in terms of the rules of that fund.

4. ARE RETIREMENT FUNDS IN MOZAMBIQUE TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Retirement funds can be defined benefit, defined

contribution, or hybrid plans.

5. ARE RETIREMENT FUNDS IN YOUR COUNTRY TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

They are generally employer specific. Currently

Global Alliance has the only registered or active

‘open’ (umbrella) fund in Mozambique with four

participating employers.

6. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, MOZAMBIQUE, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

Employers are not obliged to make contributions

towards the National Institute of Social Security if

the foreign employees can demonstrate that they

are covered by the social security system of

another country.


There is no specialised dispute resolution forum for

retirement fund disputes. General Mozambican labour

and/or commercial law applies.

Mozambique

BOWMAN GILFILLAN


28 29



It is primarily the supervisory committee. Regulation 50

also identifies the following entities as being permitted

to “intervene” in the governance of a fund:

◾ marketing entities (i.e. the insurer for an

underwritten fund);

◾ the supervisory committee (similar to a board of

trustees);

◾ the responsible actuary;

◾ the external auditor; and

◾ managing entity which is the administrator.

The managing entity also has certain reporting

functions in terms of the Regulations.


Regulation 53 provides the following regarding the

composition of the supervisory committee:

◾ The supervisory committee shall consist of

representatives of the affiliate, and the pension

fund members and beneficiaries, and the

beneficiaries shall be assured of representation

by not less than one-third of the members of

the committee.

◾ The representatives of the pension fund members

and beneficiaries shall be nominated by the trade

union, or, if this does not exist, by organized

election for this purpose, between the pension

fund members, the managing entity or by the

affiliate, on the terms set out in the management

agreement of closed pension funds, or in the

collective membership agreement for open pension

funds.

◾ If, however, the pension plan resulted from a

collective negotiation, the representatives of the

pension fund members and beneficiaries shall be

appointed by the subscribing trade union(s), on

the terms agreed between them, or, in the absence

of an agreement, by direct election performed

between themselves, for this purpose.

◾ The workers´ or trade union must appoint the

relevant representatives within a maximum period

of twenty days following their due convening for

this purpose.

◾ If a member of the supervisory committee renounces

the mandate for which he or she was elected, or

becomes incapacitated or permanently unable to

perform his or her duties, for any reason, he or

she shall be substituted, up until the expiry of the

existing mandate, by an alternate, if this exists, or

by another member appointed in the same manner.


In terms of Regulation 36, the managing entity is

required to exercise the functions for which it is

responsible in accordance with a high standard of

diligence and professional competency, and shall

act quickly and efficiently in its collaboration with

other pension fund governance structures and in the

provision of information required in terms of the law.

Regulation 54(7) provides that the members of the

supervisory committee are subject to a duty of

confidentiality as regards all matters of which they

may have knowledge as a result of the functions

they exercise, except if the same matters are already

within public knowledge.


The social security system is administered by the

National Social Security Institute. A separate pension

insurance scheme exists for civil servants and is

administered by the Ministry of Finance.

12. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN MOZAMBIQUE?

Regulation 41 provides that a pension fund

management company must be incorporated and must

satisfy the following requirements:

◾ meet the criteria of opportunity and convenience,

fundamentally connected to the economic-

financial or market interest for which the setting

up of pension funds was intended for the Republic

of Mozambique;

◾ if the company’s object as contained in its articles

of association is the management of only one

closed pension fund then it need only have share

capital of at least 1.250.000,00 Mt ;

◾ contain, in its name, the expression “Pension Fund

Management Company”; and

◾ conduct its principal and effective management,

and have its head office, in the Republic of

Mozambique.


Retirement funds are governed by the Regulations

on the Establishment and Management of Pension

Funds (“the Regulations”), the General Statute on

Functionaries and Agents of the State Act No. 14 of

2009, the Law on Social Protection No. 4 of 2007

and the Social Protection Law 5 of 1989.




South Africa

30 31



Retirement funds are governed by the Constitution of

the Republic of Namibia, which is the supreme law, the

common law and a number of statutes which include:

◾ Pension Funds Act 24 of 1956

◾ Income Tax Act 24 of 1981

◾ The Maintenance Act 9 of 2003

◾ Financial Institutions (Investment of Funds) Act 39

of 1984

◾ Inspection of Financial Institutions Act 38 of 1984

◾ Namibia Financial Institutions Supervisory

Authority Act 3 of 2001

There are other pension funds established by their

own statutes such as the Members of Parliament and

Other Office-Bearers Pension Fund established by

Act 20 of 1999.


The Namibia Financial Institutions Supervisory

Authority (“ NAMFISA”) regulates and supervises the

industry. It is an independent institution established

to regulate and supervise the non-banking financial

services industry of Namibia. The Pensions Funds Act

read with NAMFISA Act defines the Registrar of Pension

Funds as the Chief Executive Officer of NAMFISA.


The Registrar of Pension Funds can only issues circulars

on matters relating to pension fund administration

and operation because neither the Pension Funds Act

nor NAMFISA Act empowers the regulator to make

subordinate legislation. Therefore the circulars which

are issued by the Registrar are not binding as law.

The circulars can be obtained from the Pension Funds

Department at NAMFISA (www.namfisa.com.na)


There is no statutory or common law obligation on

employers to contribute to a particular retirement

fund on behalf of their employees. Employee

membership to a retirement fund is governed by

the employment contract and the conditions of

employment. Employers are also not obligated by

statute or common law to include a retirement savings

benefit as part of their employee’s remuneration.

Namibia

EBL CONSULTING

5. ARE RETIREMENT FUNDS IN NAMIBIA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

The majority of the registered retirement funds in

Namibia are defined contribution funds. However the

largest pension fund, the Government Institutions

Pension Fund (“GIPF”), is a defined benefit fund.


There are a number of employer-specific retirement

funds in Namibia. However, the majority of employers

participate in voluntary multi-employer retirement

funds, which are mainly sponsored by insurance

companies and retirement fund administrators.

Namibia does not have industry-specific multi-

employer funds.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, NAMIBIA, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

There is no obligation on the employer to make

contributions to an occupational pension scheme,

unless it is part of the employee’s conditions of

employment. However there is an obligation to make

contributions to the national social security scheme, in

accordance with the provisions of the Social Security

Act 6 of 1994.


There is no dispute resolution forum set up in terms of

any retirement fund legislation. However NAMFISA has

within its operational structure established a consumer

complaints department, which is mandated to mediate

disputes that arise between employers, administrators

and members. Any decisions taken by NAMFISA during

the mediation process are not binding as law and

therefore cannot be enforced. Members, employers

and administrators have the option to resolve their

disputes through the courts.



Namibian retirement funds become separate legal

entities upon registration. The governance of the

affairs of the fund are then managed by a board of

trustees who are appointed in accordance with the

fund rules.


There are no statutory requirements regarding the

composition of the board of trustees.

The composition is governed by the rules of the

respective retirement fund.

32 33

11. ARE THERE ANY LEGISLATIVE OR REGULATORY INITIATIVES THAT HAVE BEEN PUT IN PLACE, OR ARE PLANNED, TO STRENGTHEN THE GOVERNANCE OF RETIREMENT FUNDS IN NAMIBIA (E.G. COMPULSORY TRUSTEE TRAINING; SUITABILITY OR ‘FIT AND PROPER’ CRITERIA FOR FUND TRUSTEES; RISK MANAGEMENT AND SO ON)?

There are currently no legislative or regulatory

initiatives in place. The retirement fund trustees

determine their own training requirements and develop

and implement their own governance policies. As at

July 2014 there is a proposed Financial Institutions and

Markets Bill (“FIM Bill”) that will replace the current

Pension Funds Act. The FIM Bill requires retirement

funds to adhere to governance standards such as the

implementation of ‘fit and proper’ requirements, a

code of conduct for trustees and risk management. The

Bill also empowers the registrar to remove and replace

unfit and improper trustees.


Most of the retirement funds are administered by third

party service providers; however the larger employer-

specific funds such as the GIPF are self-administered.

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN NAMIBIA?

There are currently no licensing and or approval

requirements for pension fund administrators under

the Pension Funds Act or the NAMFISA Act. Fund

administrators are not regulated in Namibia. However

the proposed FIM Bill makes provision for the approval

and licensing of fund administrators.


The investments of a registered retirement fund are

governed by section 19 of the Pension Funds Act and

regulation 28 and 29 issued in terms of section 36(bB)

of the Pension Funds Act. Regulation 28 limits the

extent to which retirement funds may invest in certain

categories of assets. It defines the asset classes in

which a retirement fund may invest and prescribes the

maximum investment in an asset class. Regulation 28

also limits the amount of retirement fund assets that

may be invested outside Namibia. Currently, Namibian

retirement funds may invest up to a maximum of

65% of its assets outside Namibia. The remaining 35%

must be invested in Namibia, of which 5% must be

investment in unlisted investments. Other legislation

such as the Financial Institutions (Investment) of Funds

Act, 39 of 1984, the Unit Trust Control Act 54 of 1981

and the Stock Exchanges Control Act 1 of 1985 may also

be applicable to a retirement fund.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN NAMIBIA?

Asset managers have to be approved by NAMFISA in

terms of section 4 of the Stock Exchange Control

Act in order to operate as an asset manager in

Namibia. The Pension Fund Act does not impose any

approval requirement on asset managers that render

services to retirement funds. In order to operate

as long or short term insurers in Namibia, the insurers

must register with NAMFISA in terms of the Long Term

Insurance Act 5 of 1998 and the Short Term Insurance

Act 4 of 1998, respectively. An insurer cannot

operate an insurance company in Namibia without

being registered.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS IN RELATION TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN NAMIBIA?

The Namibian retirement fund industry faces the

following challenges:

◾ Outdated legislation;

◾ Non-submission or inconsistent submission of

returns by retirement fund, rendering it difficult

for the regulator to effectively regulate and to

accurately report on the performance of the

industry;

◾ The lack of regulation of service providers such as

administrators and consultants;

◾ Reduction of retirement savings due to the

apparent high costs of administrative, investment

and consulting services;

◾ Unskilled and under-trained trustees resulting in

the inadequate governance of retirement funds;

◾ Low levels of retirement savings and the utilisation

of retirement savings before retirement; and

◾ An increasing number of unclaimed benefits.

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN NAMIBIA? IF SO, PLEASE BRIEFLY DESCRIBE THESE AND THE FORUM IN WHICH THEY ARE TAKING PLACE.

The proposed FIM Bill seeks to establish a holistic,

integrated platform for the regulation of financial

institutions and endeavours to address areas that are

not addressed, or not adequately addressed, in the

current Pension Funds Act such as:

◾ Proper governance of retirement funds so as to

ensure that the funds are managed effectively

and efficiently, by monitoring of the trustee

performance

◾ Registration of service providers such as

administrators and consultants so as to effectively

regulate the entire retirement fund industry

◾ Increasing the administrative penalties so as to

ensure effective enforcement of the law

◾ Strengthening regulation by empowering NAMFISA

to issue subordinate legislation known as

prudential standards

◾ The FIM Bill establishes the office of a Financial

Institutions Ombudsman that will address

consumer complaints lodged by consumers of

services offered by financial institutions such as

retirement fund members

◾ The establishment of beneficiary funds. Retirement

funds will be able to transfer to beneficiary funds

those benefits of members and beneficiaries (majors

and minors) who cannot be traced.

Sophia Amoo-ChimundaEBL CONSULTINGSouth Africa 27 Lina Estates, Wilgelbom Street

Boskruin

NamibiaPO Box 98750, Pleican square,

Windhoek, Namibia

34 35

5. ARE RETIREMENT FUNDS IN NIGERIA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Following the enactment and the commencement of

the PRA in 2005, defined contribution schemes became

the norm for investment funds in Nigeria. The PRA

allowed private sector organisations that already

operated a pension scheme prior to the commence-

ment of the PRA, including defined benefits schemes,

to maintain such schemes. This was subject to

certain conditions such as that such pension schemes

be fully funded, the pension funds and assets be

fully segregated from the organisation’s funds, and

that such funds be held by a custodian. Private

sector schemes which meet these criteria are largely

defined benefit funds and are referred to as closed

pension fund schemes. They represent the only

exemption to the requirement that employers must

transition from defined benefits scheme to defined

contribution pension schemes. Employers that

choose to maintain their existing pension schemes

are required to apply to PenCom to be licensed

as closed pension fund administrators.

6. ARE RETIREMENT FUNDS IN NIGERIA COUNTRY TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

Other than with respect to closed pension funds,

which are employer-specific retirement schemes

operated by individual employers, retirement funds

in Nigeria are now defined contributions funds.

The contributions are managed by pension fund

administrators licensed by PenCom under the PRA.

The pension fund administrators may maintain

retirement savings accounts for any employee that

applies to it, irrespective of the sector in which such

individual is employed.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, YOUR COUNTRY, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

Employers do not have a statutory obligation to make

contributions to an occupational pension scheme

in respect of foreign employees seconded or employed

in Nigeria. Under the Guidelines for Cross Border

Arrangements issued by PenCom, however, a foreign

employee employed in Nigeria may elect to join

a contributory pension scheme established under

the PRA.


The PRA provides for a two-layered dispute resolution

mechanism for addressing disputes that arise between

an employee, the beneficiaries of a retirement saving

accounts, pension fund administrators or custodians.

As a first step, the complainant is required to write

to PenCom requesting a review of the decision

complained about, and PenCom is required within

three months from the date of the referral, to dispose

of the matter finally. Where the complainant or any

of the other parties to the dispute is dissatisfied with

PenCom’s decision, such party may refer the matter

to arbitration in accordance with the Arbitration

and Conciliation Act, Chapter A18, Laws of the

Federation of Nigeria 2004 or to the Investment and

Securities Tribunal established under the Investment

and Securities Act 2007; and any award made shall be

binding on the parties and enforceable in the Federal

High Court.


9. WHO IS RESPONSIBLE FOR THE MANAGEMENT OF THE FUND?

In terms of section 44 of the PRA, pension fund

administrators are the managers of retirement funds,

and they are separate and distinct legal entities from

the employers that remit the contributions to the

fund, the employees who maintain retirement savings

account with the pension fund administrators, and

the pension fund custodians, licensed by PenCom

under the PRA, that maintain custody of fund assets.

By virtue of their being companies limited by shares,

the management of pension fund administrators is

vested in their respective boards of the directors, who

carry out their functions in line with the applicable

regulatory requirements.



Retirement funds and investments by retirement

funds are primarily governed by the provisions of the

Pension Reform Act, Chapter P4, LFN 2004 (“PRA”).

The PRA, came into effect in January 2005 and

applies to employees in both the public and private

sector, but excludes justices of the Court of Appeal

and the Supreme Court of Nigeria, members of the

Armed Forces of the Federation and members of the

Intelligence and Secret Services.

Investments by Pension Fund Administrators (“PFAs”)

is also subject to the provisions of the Investments

and Securities Act 2007 (the “ISA”) and the Rules and

Regulations issued by the Securities and Exchange

Commission pursuant to the provisions of the ISA

(the “SEC Rules”) to the extent that such securities

or instruments are regulated by the Securities and

Exchange Commission.


The National Pension Commission (“PenCom”), an

independent institution established under the PRA, is

the principal authority charged with the responsibility

of regulating and supervising the pensions and

retirement fund industry. Its functions include (i) the

establishment of standards, rules and guidelines for

the management of the pension funds; (ii) approval,

licensing, regulation and supervision of pension fund

administrators, custodians and other institutions

relating to pension matters; and (iii) promoting

capacity building and institutional strengthening of

pension fund administrators and custodians.


The PRA empowers the PenCom to issue rules and

regulations, codes of corporate governance, circulars

standards, directives and guidelines for the investment

and management of pension funds. The rules and

regulations, codes of corporate governance, circulars

standards, and guidelines issued by the PenCom

have the status of subsidiary legislation and attract

penalties for non-compliance. The PenCom is also

empowered to perform such other duties as, in its

opinion, are necessary or expedient for the discharge

of its functions. The PRA, rules and regulations,

codes of corporate governance, circulars, guidelines,

as well as other information can be obtained on the

PenCom’s website at www.pencom.gov.ng


The PRA imposes a statutory obligation on employers

to contribute to a mandatory occupational retirement

fund for employees, and this obligation applies to

employers in both the private and the public sectors.

This obligation only applies, however, to employers

who employ more than five persons in their

organisations. Contributions to the fund are deductible

for income tax purposes.

Nigeria

UDO UDOMA & BELO-OSAGIE

36 37

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN NIGERIA?

The PRA stipulates that every pension fund

administrator and pension fund custodian must be

licensed by PenCom. A pre-requisite for granting

a licence to custodian of a pension fund is that

the entity/custodian must be a licensed financial

institution. Financial institutions are regulated by the

Central Bank of Nigeria. Where the financial institution

is an insurance company, such company is required to

be licensed by the National Insurance Commission.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN NIGERIA?

Some of the key issues currently facing the retirement

fund industry in Nigeria include:

◾ Non-compliance with remittance obligations (i.e.

payment of contributions) by employers;

◾ Limited investment opportunities which have led

to the investment of over 50% of pension funds in

government securities;

◾ Infrastructural constraints with respect to the

administrative and customer service operations of

pension fund administrators;

◾ Capacity building and development.

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN NIGERIA?

There is currently a Pension Reform Act Bill (“Bill”)

before the National Assembly, which is the federal

legislative arm of Nigeria. The National Assembly

consists of two houses: the House of Representatives

and the Senate. The Senate has already approved and

passed the Bill which is awaiting the concurrence of the

House of Representatives. The major changes sought to

be introduced by this Bill include the following:

◾ The contributory scheme would become applicable

to employers that have three or more employees

as opposed against to the current provisions that

are applicable to employers that have five or more

employees.

◾ The total rate of contribution would be increased

to 20% of an employee’s monthly emoluments

from the current rate of 15%, with the employer

contributing a minimum of 12% as opposed against

to the current rate of 7.5%, while the employee

would contribute a minimum of 8% representing an

increase of 0.5% from the current rate of 7.5%.

◾ A change in the basis for the computation of the

total monthly emoluments of an employee. Under

the current PRA, the total monthly emoluments

are defined as a total sum comprising basic salary,

housing allowance and transport allowance, but

the Bill proposes to change this definition such

that total emoluments will be as defined in the

employee’s contract of employment but shall not

be less than the total sum of an employee’s basic

salary, housing allowance and transport allowance.


The Code of Corporate Governance for Licensed

Pension Operators issued by PenCom (“Code”),

prescribes the composition of the board of directors

of pension fund administrators and pension fund

custodians. The Code requires that the board must, at

a minimum comprise of equal numbers of executive

and non-executive directors, apart from the Chairman

of the Board, and must have an independent director.

The prior approval of PenCom is required in respect

of all appointments to the boards of directors of

‘pension operators’ or administrators. The pension

operators are companies limited by shares and

incorporated under the Companies and Allied Matters

Act, Chapter C20, Laws of the Federation of Nigeria

2004 (“CAMA”) and, therefore, in addition to the grant

of the PenCom’s approval, the appointment, removal,

meeting and voting procedures are subject to the

provisions of CAMA.


Pension operators are required to develop and

implement an annual training programme for their

employees and, to this end, must ensure that a

sufficient budgetary allocation is set aside for the

annual training. In addition, PenCom also organises

quarterly training for Heads of Human Resources and

officials of licensed pension operators. The pension

operators are also obliged to comply with the

provisions of the regulations, guidelines, circulars

and directives issued by PenCom in respect of

their operations including the Code of Corporate

Governance and the Whistle Blowing Guidelines for

Pensions. Every pension operator is also required

to appoint a Compliance Officer whose statutory

obligation it is to ensure that the pension operator

complies with the provisions of the PRA, codes,

guidelines, rules and regulations issued by PenCom.

The Guidelines for Appointment to the Board and

top management positions of pension fund

administrators and pension fund custodians also

prescribes “fit and proper person” criteria in relation

to appointments to the boards of directors or top

management positions of pension operators.


Under Nigerian law, other than with respect to closed

pension fund administrators, pension funds are

administered by third parties licensed by PenCom to

operate as pension fund administrators.

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN NIGERIA?

Pension fund administrators are licensed by PenCom

pursuant to the PRA. The requirements for the grant

of a licence are provided in the Requirements for

Pension Fund Administrator Licence guideline issued

by PenCom, and this guideline can be accessed on

PenCom’s website.


The PRA regulates investments by pension fund

administrators, and sets out the categories of

permitted investments, prohibited investments and

penalties for non-compliance. The PRA prohibits

pension fund administrators from investing pension

fund assets in shares or other securities issued by the

pension fund administrator, pension fund custodian,

a shareholder of the pension fund administrator

or custodian.

In addition to the general investment guidelines

set out in the PRA, the PenCom’s Regulation on

Investment of Pension Fund Assets 2012 (“Investment

Regulation”) prescribes the investment limits, the

required liquidity levels to be maintained by pension

fund administrators, the type of instruments in which

pension funds and assets can be invested, safeguards

for the investments and the eligibility criteria to be

met by such instruments. The PRA prohibits pension

fund administrators from investing pension fund assets

in shares or other securities issued by the pension fund

administrator, pension fund custodian, a shareholder

of the pension fund administrator or custodian. The

Investment Regulation also requires every pension

fund administrator to establish an Investment Strategy

Committee as well as a Risk Management Committee.

The provisions of the Investment and Securities Act

2007 and the SEC Rules may also be applicable to

investments by pension fund administrators where such

instruments and securities are regulated by the SEC.

UDO UDOMA & BELO-OSAGIE

St. Nicholas House (10th & 13th Floors)

Catholic Mission Street, Lagos

PO Box 53123 (Ikoyi), Nigeria

38 39

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, SENEGAL, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

The position in relation to seconded employees is not

stipulated in local law. However, foreign employees

working in Senegal may participate in a pension

scheme provided that they are not affiliated to any

other pension scheme.


A dispute in relation to a retirement fund can be dealt

with through amicable settlement facilitated through

IPRES, or a court of law.


9. WHICH ENTITY OVERSEES THE MANAGEMENT OF FUNDS?

It is required that the board of directors of the

IPRES holds representation from both employers and

employees. The employers and employees are elected

by their respective and most representative unions.

The mandatory scheme in public sector is managed by

the FNR. Contributions are held in a special treasury

account controlled by the Minister of Finance.


It is required that the board of directors of the

IPRES holds representation of both employers and

employees.


Retirement funds are self-administered.

12. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN SENEGAL?

The operating of a social security or old-age pensions

activities requires authorisation from the Ministry of

Labour.


There is no specific legislation governing investment

by retirement funds in Senegal.

14. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN SENEGAL?

The operating of a social security or old-age pensions

activities requires an authorisation from the Ministry

of Labour.

RETIREMENT REFORM

15. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN SENEGAL?

Most of the law that governs the retirement

fund industry in Senegal is outdated and needs to

be changed.



Retirement funds are governed by the following laws:

◾ Decree No. 75-45 dated April 24, 1975 requiring

employers to affiliate the employees to a pension

plan (the “Decree 75 -455”);

◾ Decree No. 76-17 dated January 19, 1976 amending

the Decree 75-455;

◾ Law No. 62-45 dated June 13, 1962 establishing a

pension scheme for the benefit of non-government

employees, local authorities, public institutions,

state companies and joint venture companies (the

“Decree 62 -45”);

◾ Decree No. 62-0242 implementing Law No. 62-45;

◾ Law No. 75-50 dated April 03, 1975 on the social

security institutions;

◾ Law No. 97-17 dated December 1st, 1997 on the

labour law; and

◾ Ordinance No. 3043 dated 09 March 1978 creating

a pension institution, the Institution de prévoyance

retraite du Sénégal (“IPRES”).


The IPRES regulates and oversees the retirement

scheme in the private sector. It operates under the

joint supervision of the Ministry of Public Function,

Ministry of Labour, and the Ministry of Finance.

The Fond National de Retraite (“FNR”) regulates the

retirement scheme in the public sector (for civil

servants). FNR is controlled by the Ministry

of Finance.


The IPRES, the Ministry of Public Function and the

Ministry of Labour may issue board notices, circulars,

directives, or guidance notes. Some regulations such as

laws, decrees, directives, or circulars can be obtained

at the following websites: http://www.gouv.sn/-Lois-et-

reglements-.html and http://www.jo.gouv.sn/


Employers and the employees based in Senegal must

join a retirement scheme.

5. ARE RETIREMENT FUNDS IN SENEGAL TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Retirement schemes in Senegal are classed as defined

benefit funds.


There is only one retirement scheme in the private

sector.

Senegal

JOHN W FFOOKS & CO


JOHN W FFOOKS & CO

Immeuble Assist – 1st floor

Ivandry

Antananarivo 101

Madagascar

40 41



The primary legislation governing pensions in

Seychelles is the Seychelles Pension Fund Act, 2005

(“SPFA”) which provides for a compulsory national

fund, the Seychelles Pension Fund (“SPF”), in which all

workers who are citizens are obliged to participate.

“Worker” refers to all persons above the age of 15 years

if in full time or part time employment in Seychelles,

or on a Seychelles ship or aircraft, or in an agency or

diplomatic mission of Seychelles abroad and who are

liable to pay social security contributions in terms of

the Social Security Act. (The definition also includes a

‘stevedore’ or a casual worker.)

In terms of section 65 of the SPFA, nothing in the Act

prevents an employer from operating a private pension

scheme providing a worker with benefits, whilst

complying with the Act and the law.


The non-banking financial services industry is regulated

by the Financial Services Authority (“FSA”). In terms of

the Financial Services Authority Act, which establishes

the FSA, and sets out its powers and functions, the

chief executive officer of the FSA is the registrar.

The registrar is charged with the administration and

operation of the FSA. Non-banking financial services

include services provided in accordance with the

following legislation: Securities Act, Insurance Act,

International Corporate Services Providers Act, Mutual

Fund and Hedge Fund Act, International Trade Zone

Act, Companies (Special Licenses) Act, Protected Cell

Companies Act, Interactive Gambling Act, and Hire

Purchase and Credit Sale Act. In terms of the Financial

Services Authority Act, the FSA is empowered to issue

directives, codes, guidelines and Public Statements in

relation to non-banking service providers.


The SPFA makes it compulsory for employers to

contributions to the SPF on behalf of its employees for

as long as they remain employed with the employer.

4. ARE RETIREMENT FUNDS IN SEYCHELLES TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS? The SPFA is a defined benefit scheme.

Seychelles

BOWMAN GILFILLAN



The SPF is a national fund to which all employers

contribute on behalf of their employees and

accordingly operates as a multi-employer fund.

Although the SPFA allows for employers to contribute

to private pension plans, it seems that, no such plans

exist currently and the legislation does not prescribe

that these funds be employer specific only.

6. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, SEYCHELLES, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

In terms of the SPFA, contributions to the fund are

compulsory only for workers who are citizens of

Seychelles. Therefore, seconded employees do not

have to contribute to the SPF.


The Act does not provide a specific forum for disputes

to be taken to. The normal court processes would

then govern the resolution of pension disputes.



In terms of the SPFA, the SPF shall be administered by

a board of trustees which is responsible for the overall

management of the affairs of the SPF including the

operation of the SPF and making investment decisions.


Section 6 of the SPFA prescribes the composition of

the board. Board members are to be appointed by the

President for a term of three years or shorter period as

the President may determine and they are eligible for

reappointment. In terms of the SPFA, the board must

comprise a chairman, a representative of the Ministry

of Finance and not more than ten persons, of whom:

◾ at least two must represent the public sector;

◾ two shall represent employers in the private sector;

and

◾ two must represent workers.

If the President is of the opinion that a person who

was appointed to represent the interests of a particular

group no longer represents that group, the President is

empowered to replace that board member.

10. ARE MOST RETIREMENT FUNDS SELF- ADMINISTERED OR ARE THEY ADMINISTERED BY THIRD PARTY SERVICE PROVIDERS? The SPF is self-administered. In terms of section 15, the

President shall appoint a chief executive officer who

will be responsible for the day to day running of the

SPF which includes the collection of contributions,

payment of pensions and other benefits, investment

of surplus moneys of the fund and accounting for all

moneys collected, paid or invested under the SPFA.

Section 16 empowers the fund to employ such staff as

may be necessary for the administration of the fund on

terms and conditions to be determined by the board.

Private pension schemes are administered by third

party administrators.

42 43


Principles relating to the investment of the SPF

are regulated by the SPFA. Section 51(2) of the SPFA

empowers the board of trustees to develop and

maintain investment guidelines for the fund. The

guidelines must include kinds of investments to

be held, the proportions in which the different kinds

of investments are held, risks, expected return on

investment and relevant matters.

The board of trustees is further empowered to make

investments under the SPFA, as far as possible in

accordance with the guidelines having regard to the

need for diversified investments and appropriate to

the circumstances of the fund and the suitability of

the particular investment or the kinds of investments

proposed. However, the board is obliged, before

making any investment, to obtain and consider

advice on the question of whether the investment is

satisfactory having regard to the matters mentioned

in section 51 of the SPFA.

In addition the Minister may in terms of section 68(e)

of the SPFA, on the recommendation of the board make

regulations for specifying ratios for investments.

As to the different asset types that the fund can

invest in, section 50(2) provides that investments

may be made in bank deposits, treasury bills and

bonds, shares, commercial, residential, and industrial

property, housing and direct lending if the board is

satisfied that there is sufficient security. However, it

does not prohibit the fund from investing in other

asset classes or types, nor does it limit the extent to

which the fund can invest in those asset types.

The investment is assessed based on the level of risk,

the returns it is likely to yield, whether the investment

is suitable, and whether it takes into account

diversification of investment as an appropriate

investment strategy for the fund.

RETIREMENT REFORM

12. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS IN RELATION TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN SEYCHELLES?

In an effort to increase retirement coverage there

are efforts to encourage independent or self-employed

persons to participate in the SPF.


Retirement funds are governed by the common law,

the Constitution of the Republic of South Africa and

a number of different statutes. All retirement funds

are subject to laws of general application, such as the

Income Tax Act 8 of 1962, the Divorce Act 70 of 1979,

the Maintenance Act 99 of 1998 and the Financial

Advisory and Intermediary Services Act 37 of 2002.

Retirement funds, primarily ‘private sector funds’,

which are obliged to register under the Pension Funds

Act 24 of 1956 (“the PFA”) are primarily regulated

by that Act. Aspects of the Financial Services Board

Act 97 of 1990, the Inspection of Financial Institutions

Act 80 of 1998 and the Financial Institutions

(Protection of Funds) Act 28 of 2001, also apply to

these private sector funds.

Other retirement funds, known as ‘public sector funds’

(such as the Government Employees Pension Fund and

the Post Office Retirement Fund), are established for

employees of the State, its entities and its enterprises.

They are established by their own statutes (such as

the Government Employees Pension Law 21 of 1996

in the case of the Government Employees Pension

Fund), and the PFA does not apply to them until and

unless they register in terms of the PFA.

2. WHO IS THE INDUSTRY REGULATOR? The office of the Registrar of Pension Funds, which

falls within the ambit of the Financial Services Board

(“the FSB”), regulates and oversees the retirement

fund industry. The FSB is an independent institution

established by statute to oversee the South African

non-banking financial services industry in the public

interest. Certain service providers to retirement

funds, such as investment consultants for example,

are also regulated by the FSB.


In relation to private sector retirement funds, the

PFA empowers the Registrar of Pension Funds by

notice in the Government Gazette, to issue board

notices and directives on certain issues. The Registrar

of Pension Funds also issues circulars. However, unlike

board notices and directives which have the status

of subordinate legislation, circulars are an expression

of the Registrar’s opinion and are not binding in law.

Other regulators, such as the Registrar of Financial

Services Providers also issue board notices, directives

and circulars. Board notices, directives, circulars as

well as other information can be obtained on the FSB’s

website at www.fsb.co.za.

South Africa

BOWMAN GILFILLAN


BOWMAN GILFILLAN

Johannesburg165 West Street, Sandton,



South Africa

44 45


There are no statutory obligations on employers

to contribute to a particular retirement fund or

any retirement fund on behalf of employees. Many

employees employed in both the private and public

sector in South Africa are required, in terms of

their conditions of employment, to become members

of retirement funds (as opposed to a statutory

obligation). Membership of an occupational retirement

fund is usually a condition of employment because

the contributions to such funds are only deductible

for income tax purposes if their rules provide that

membership of the funds are compulsory for all or

certain categories of employees. Employers engaged in

certain economic sectors or industries may be compelled

to enrol employees up to certain grades in industry

specific multi-employer funds in terms of collective

bargaining agreements applicable to these sectors, for

example the Private Security Sector Provident Fund and

the Metal Industries Provident Fund.

5. ARE RETIREMENT FUNDS IN SOUTH AFRICA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

In the private sector there has been a shift from

defined benefit funds to defined contribution funds

since the 1990’s. The majority of private sector

retirement funds today are defined contribution

funds, although some may retain defined benefit

elements. Most public sector retirement funds are

still defined benefit funds or have significant defined

benefit components.


South Africa has many employer-specific retirement

funds. However, there has been a steady increase in

employers participating in voluntary multi-employer

retirement funds since the late 1990’s. Some private

sector employers participate in industry specific multi-

employer funds in terms of collective agreements or

regulation, usually for employees up to a particular

grade of employment, for example, the Metal

Industries Provident Fund and the Chemical Industries

National Provident Fund.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN, SOUTH AFRICA, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

Not unless it is part of the employee’s conditions of

employment, or the employer is obliged to enrol that

employee in an industry-specific fund.


In relation to retirement funds registered under the

PFA there is a dispute resolution forum, known as

the ‘Office of the Pension Funds Adjudicator’. The

Adjudicator is empowered under the PFA to determine

pension-related disputes. A complainant may lodge

a complaint with the Adjudicator free of charge and

without the assistance of a lawyer. Most matters are

determined on the papers and although the adjudicator

could hold hearings if the matter warrants it. The

adjudicator can also require the parties to participate

in an informal conciliation process to attempt to settle

the matter. Determinations issued by the Adjudicator

do not have value as legal precedent but can be

enforced as a civil judgment of a court of law and can

be appealed to the high court.

In relation to public sector funds, no equivalent dispute

resolution forum as that of the Office of the Pension

Funds Adjudicator exists. Members or employers

of those funds are left to lodge complaints / bring

applications to the High Court.



Retirement funds are separate legal entities from

the employers participating in the fund, or from

the sponsors who establish the fund. Boards of

management of retirement funds, which comprise

trustees, are mainly responsible for fund governance. 10. WHAT ARE THE LEGAL REQUIREMENTS (IF ANY) REGARDING THE COMPOSITION OF THAT ENTITY (FOR ExAMPLE, EQUAL REPRESENTATION FOR EMPLOYER AND EMPLOYEE)?

In relation to retirement funds registered under the

PFA, the PFA requires that the board of the fund must

comprise at least four board members, at least 50% of

whom the members of the fund must have the right

to elect. The PFA provides that the constitution of the

board, the election procedure, the appointment and

terms of office, the voting rights of board members,

the powers of the board and so on must be set out in

the rules of the fund. The rules are registered by the

registrar of pension funds.


Pension funds are obliged to furnish training to trustees

within six months of their appointment. There is

currently no compulsory, standardised trustee training

for trustees but the FSB does have an online training

facility called the Trustee Toolkit which trustees can

complete voluntarily. Many boards of funds regulate

their own trustee training. In addition, Pension

Fund Circular 130 (which deals with governance of

retirement funds) is to be elevated to the level of a

directive and deals with a range of governance issues

such as risk management, performance appraisals,

Codes of Conduct for trustees, ‘fit and proper’

requirements for trustees and trustee training. There

have also been recent amendments to the PFA that

impose whistle-blowing obligations on trustees and

which allow the registrar to prescribe ‘fit and proper’

requirements for trustees to fulfil.


The majority of retirement funds are administered

by third party service providers, however, some

larger employer-specific funds and several bargaining

council funds are self-administered.

46 47

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN SOUTH AFRICA?

Any third party administering a private sector

retirement fund that is registered under the PFA must

be licensed and approved as a fund administrator by

the registrar in terms of the PFA. The conditions for

the approval of a fund administrator are published in

Board Notice 24 of 2002. In relation to public sector

retirement funds, such as the Government Employees

Pension Fund for example, the requirements are

determined by the relevant special statute. However,

there is no formal prohibition on public sector

funds appointing private service providers to

administer them.


In relation to private sector funds registered under the

PFA, the PFA itself (section 19) read with regulation

28 published thereunder regulates investments by

retirement funds. Regulation 28 deals with, amongst

other things, the type of instruments in which

funds can invest; the liquidity levels which must be

maintained by a fund and spreading of the fund’s assets

in different investment vehicles. Notably, retirement

funds are specifically permitted to invest 5 % of their

assets in suitably regulated investments in Africa.

Other legislation, such as the Financial Advisory and

Intermediary Services Act 37 of 2002, the Financial

Institutions (Protection of Funds) Act 28 of 2001,

Collective Investment Schemes Control Act 45 of 2002

may also be applicable to a retirement fund depending

on the particular investment.

The PFA read together with Regulation 28 does not

prohibit retirement funds from investing in any specific

asset or asset class. Instead Regulation 28 places

restrictions on investment in specific asset classes. In

this regard:

◾ a private pension fund must not invest or

contractually commit to invest in an asset,

including a hedge fund or private equity fund,

where the fund may suffer a loss in excess of its

investment or contractual commitment in the

asset.

◾ a fund may engage in securities lending subject to

prescribed conditions.

◾ a fund may invest in derivative instruments subject

to prescribed conditions.

◾ a fund may not acquire a controlling interest in a

company.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN SOUTH AFRICA?

Asset managers have to be approved by the FSB as

authorised financial services providers under FAIS in

order to operate as service providers to retirement

funds. The Registrar of Pension Funds has exempted

asset managers from the requirement to obtain

additional authorisation under the PFA (e.g. section 13B

approval under the PFA) to the extent that they have

obtained FAIS authorisation. No person (including a

foreign financial services provider) may render financial

services to a retirement fund in South Africa without

authorisation from the FSB. In order to provide services

to retirements in South Africa short-term or long-term

insurers are required to obtain approval from the FSB

in terms of the Short-Term Insurance Act, 1998 (STIA)

or the Long Term Insurance Act, 1998 (LTIA) whichever

is applicable. Apart from the aforesaid approvals,

insurers do not require additional approvals in order

to provide services to retirement funds. No person

(including a foreign insurer) may render services to a

retirement fund in South Africa without authorisation

from the FSB.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN SOUTH AFRICA?



the following:

◾ Inadequate governance of retirement funds

related to no formal governance qualifications or

standards for fund trustees investments

◾ Low levels of retirement savings and the utilisation

of retirement savings before retirement

◾ Fragmentation of regulatory oversight as

between prudential regulation and compliance

management;

◾ Complex tax dispensation of the treatment of

contributions to and benefits from retirement

funds

◾ Concerns about high charges in retirement systems

reducing retirement savings

◾ Inadequate mechanisms for preservation of

retirement benefits.

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN SOUTH AFRICA? The Minister of Finance coupled with National

Treasury are currently busy with proposals relating

to reform the retirement industry, with a focus on,

amongst other things:

◾ Governance of retirement funds so as to ensure

that the trustees act independently and free from

conflict; monitoring of trustees appointment by the

FSB and introduction of fit and proper requirements

for trustees;

◾ Preservation of retirement benefits so as to ensure

that members do not ‘cash out’ their benefits when

exiting from the fund;

◾ Annuitisation and requirements of pension and

provident funds will be harmonised; and

◾ Strengthening of fund regulation by introducing

a ‘twin peaks’ model of financial regulation which

will see the FSB supervise and regulate market

conduct and consumer protection, while the

Reserve Bank will have the lead responsibility for

prudential regulation.




South Africa

48 49



All retirement funds in Swaziland (including private and

public sector funds) are governed by the Constitution

of Swaziland 2005, the Retirement Funds Act, 2005

(Primary Legislation), the Financial Services Regulatory

Authority Act, 2010 and the Income Tax Order 1975.


The office of the Registrar of Insurance and

Retirement Funds (“RIRF”) which is a division of the

Financial Services Regulatory Authority (“FSRA”)

regulates all retirement funds. The FSRA is established

by the FSRA Act, 2010 with the main objective of

regulating all non-bank financial services providers

in Swaziland. This also includes service providers

to retirement funds such as fund administrators,

investment managers and so on.


The RIRF issues circulars, directives and public

warnings and notices. These can be found on the

FSRA website at: www.fsra.co.sz.


In terms of the Swaziland National Provident Fund

Order, 1974 all employers are obliged to contribute

towards the Swaziland National Provident Fund. This

fund is the closest Swaziland has to a national social

security scheme.

5. ARE RETIREMENT FUNDS IN SWAZILAND TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

The trend in Swaziland is in the direction of defined

contribution funds. Approximately 80% of all

registered funds are defined contribution funds.


Both employer specific funds and umbrella schemes

exist. The size of the employer will determine whether

or not the employer participates in an employer

specific or umbrella fund.

Swaziland

Tilungile Ntshalintshali and Fayiya Tengbeh


In terms of the Swaziland National Provident

Fund Order, 1974 all employers excluding the

Government are mandated to contribute towards the

Swaziland National Provident Fund for the benefit of

their employees.


The Retirement Funds Act establishes the Office of

the Retirement Funds Adjudicator which adjudicates

disputes relating to all retirement funds in Swaziland.

The decisions of the Adjudicator have the same effect

as those of a High Court judgment. The Adjudicator

determines its own processes; but generally matters

are decided on papers without oral submissions.

It is proposed that the Adjudicator’s Office be

merged with of the Office of the FSRA Ombudsman

with similar but wider functions in that this office

shall then adjudicate upon disputes relating to all

non-banking financial services providers. The FSRA

Act also establishes an Appeals Tribunal to which

retirement funds can appeal against administrative

decisions handed down by the regulator.



All retirement funds are governed by a management

board. Members of the management board are known

as ‘trustees’.


As a general rule all retirement funds must have at

least fifty per cent employee representation in terms

of the Retirement Funds Act. Exemptions may be

granted for umbrella funds and retirement annuity

funds (on application).


No specific legislative requirements exist, however

the RIRF conducts training of trustees regularly

to strengthen their capacity in the governance of

funds. A “Fit and Proper and Rehabilitation Criteria”

guideline has been developed for all non-banking

financial services provider including retirement funds.


Most funds are administered by third party fund

administrators. Larger funds such as the Public

Service Pension Fund (for civil servants) and Swaziland

National Provident Fund are self-administered

with dedicated full time staff and personnel for

this purpose.

50 51

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN SWAZILAND?

All fund administrators must register and be licenced

with the RIRF in terms of the Retirement Funds Act.


The Retirement Funds Act, section 19 and schedule 1

of the Retirement Funds Regulations, 2008 stipulate

the types of assets and investment percentages that

retirement funds in Swaziland must adhere to. As a

general rule, a retirement fund in Swaziland must

invest at least 30% of its assets locally.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN SWAZILAND?

Asset managers and insurers have to be approved

by the FSRA (Capital Markets Division) as authorised

financial services providers.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE KEY ISSUES AND/OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN SWAZILAND?



the following:

◾ Non- representative management boards;

◾ Governance of umbrella funds;

◾ Failure by employers to remit contributions to

funds yet deducting employees’ salaries;

◾ Underfunded funds;

◾ Failure to recognise the separation between

employer and funds;

◾ Insufficient recourse for local members

participating in foreign funds;

◾ Late submission of statutory returns;

◾ Failure by fund administrators to adhere to

legislative procedures in the transfer of retirement

funds assets from one fund to another; and

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN YOUR COUNTRY? IF SO, PLEASE BRIEFLY DESCRIBE THESE AND THE FORUM IN WHICH THEY ARE TAKING PLACE.

There is on-going consultation with the Ministry

of Finance and other stakeholders regarding the

establishment of a proposed National Social Security

Scheme. The RIRF of the FSRA is playing a key role in

this process with management forming part of the

technical working team set up.

The proposed National Social Security Scheme is to be

made up of three pillars, namely:

(a) National Pension Fund;

(b) National Health Insurance; and

(c) Workman’s Compensation Insurance Fund.

TILUNGILE NTSHALINTSHALI

Legal Officer at Insurance & Retirement

Funds Adjudicator, Swaziland

FAYIYA TENGBEH

Financial Services Regulatory Authority,

Swaziland



Retirement funds in Tanzania are generally governed

by the Social Security (Regulatory Authority) Act No

8 of 2008 (Social Security (Regulatory Authority) Act)

which lays down the procedures and conditions for

the establishment of public and private funds. The

Constitution of the United Republic of Tanzania of 1977

as the supreme law, also governs the establishment

and operations of the schemes. Certain retirement

funds are established by their own statutes such as the

National Social Security Fund Act 28 of 1997 (National

Social Security Fund Act), the Parastatal Pensions

Fund Act, Cap. 372 of R.E of 2002 (Parastatal Pensions

Fund Act), the Public Service Retirement Benefit

Act Cap 371 R.E of 2002 (Public Service Retirement

Benefit Act), the Local Authorities Pensions Act No 9

of 2009, Retirements Benefit Fund Act No.8 of 2013

(Retirements Benefit Fund Act) and the Social Security

Law (Amendment) Act No 12 of 2012 (Social Security

Law (Amendment) Act).


The Social Security Regulatory Authority (“SSRA”)

regulates and oversees the retirement fund industry in

Tanzania. It was established under the Social Security

(Regulatory Authority) Act (as amended by Act No. 12

of 2012) with the main objective of regulating the social

security sector. The SSRA started its operations at the

end of the year 2010. 3. WHAT ARE THE POWERS AND FUNCTIONS OF THE INDUSTRY REGULATOR?

The functions, duties and powers of the SSRA are

stipulated under section 5 and 6 of the Social Security

(Regulatory Authority) Act. These include the duties

and powers: to register all managers, custodians and

schemes; to regulate and supervise the performance of

all managers, custodians and social security schemes;

to issue guidelines for the efficient and effective

operation of the social security sector; to protect and

safeguard the interests of members; to create

a conducive environment for the promotion and

development of the social security sector; to advise the

Minister on all policy and operational matters relating

to social security sector; to adopt and promulgate

broad guidelines applicable to all managers, custodians

and social security schemes; to monitor and review

regularly the performance of die social security sector;

to initiate studies, recommend, coordinate and

implement reforms in the social security sector; to

appoint interim administrators of schemes, where

necessary; to facilitate extension of social security

coverage to groups not covered by the Social Security

(Regulatory Authority) Act including informal groups;

and to conduct programmes for public awareness,

sensitisation and tracing on social security.

Also subject to the provisions of the Social Security

(Regulatory Authority) Act, the SSRA shall have

the powers to perform supervisory and regulatory

functions over managers, custodians and schemes. 4. IS THERE A STATUTORY OR COMMON LAW OBLIGATION ON EMPLOYERS TO CONTRIBUTE TO A MANDATORY BASIC NATIONAL SOCIAL SECURITY SCHEME, AND/OR A MANDATORY, PRIVATELY MANAGED OCCUPATIONAL RETIREMENT FUNDS FOR EMPLOYEES?

Every person who is self-employed or employed in

the private sector, other than in a body which is

a parastatal organisation, will be registered as an

insured person under the National Social Security

Fund Act. Employers are obliged by law to contribute

to the National Social Security Scheme to which

their employees are required to belong. The National

Social Security Fund under the National Social

Security Fund Act requires every employer on behalf

of any covered employee, to pay contributions

Tanzania

EAST AFRICAN LAW CHAMBERS


52 53


Every statute that establishes a fund requires

the establishment of a board of trustees, which deals

with the management of scheme. For example the

Retirements Benefits Fund Act, which creates and

regulates the GEPF Retirement Benefits Fund for certain

government employees, provides that that funds board

of trustees shall consist of the following members:

◾ The chairperson who shall be appointed by the

President upon advice by the Minister of Finance

◾ Nine members who shall be appointed by the

Minister such as:

◾ a representative of the Ministry of Finance;

◾ a state attorney of a rank of senior;

◾ a representative of the employer organisations;

◾ a representative of the employees organisations;

◾ two representatives from self-employed members

and the informal sector; and

◾ two representatives from the members of the

Fund who do not belong to the employees

organisation.

11. ARE THERE ANY LEGISLATIVE OR REGULATORY INITIATIVES THAT HAVE BEEN PUT IN PLACE, OR ARE PLANNED, TO STRENGTHEN THE GOVERNANCE OF RETIREMENT FUNDS IN TANZANIA (E.G. COMPULSORY TRUSTEE TRAINING; SUITABILITY OR ‘FIT AND PROPER’ CRITERIA FOR FUND TRUSTEES; RISK MANAGEMENT AND SO ON)?

There have been some initiatives including legislative

and regulatory refinements in order to ensure the

effective operation of the social security funds

in Tanzania. The Government in 2003 adopted the

National Social Security Policy. The aim of this

policy is to realise the goals set out in the vision by

extending the reach of social security services in

Tanzania. This was followed by the enactment of

the Social Security (Regulatory Authority) Act, and

the Social Security (Amendment) Act. Several social

security funds have recognised the importance of

implementing risk management and few have started

preliminary implementation efforts.


Majority of the retirement funds are administered by

third party service providers.

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN TANZANIA?

The SSRA provides criteria for fund administrators to

operate in Tanzania: Any person intending to establish

or continue to operate scheme or act as a manager or

custodian shall not operate as such unless such person

is registered under this Act. Section 14 of the SSRA

provides that a person intending to establish a scheme,

or act as a manager or custodian must submit an

application in a prescribed form and accompanied by a

prescribed fee.


In Tanzania, any legal or natural person may, subject

to complying with the requirements of the Tanzania

Investment Act, register a business enterprise with

the Tanzania Investment Centre (the “Centre”). The

Social Security (Regulatory Authority) Act, also

allows the social security funds/schemes, managers

and custodians to use the funds of the scheme for

investment in accordance with the provisions of the

Act (section 26). All the requirements for the schemes

to invest are provided under this Act.

Other legislation to be considered includes the

Financial Act No. 13 of 2008; the Financial Laws

(Miscellaneous Amendment) Act, No 9 of 2008 and the

laws establishing the schemes such as the Retirements

Benefits Fund Act. The Social Security Schemes

Investment Guidelines, 2012, provides the following

investment categories:

◾ government debt, investment limited to 20 – 70%

of the fund’s total assets;

◾ direct loans to the Government, investment limited

to 10% of the fund’s total assets;

◾ commercial paper, promissory notes and corporate

bonds investment limited to 40% of the fund’s

total assets, of which unlisted corporate debt is

limited to 10% of the fund’s total assets;

calculated as a specific percentage of employees’

salary. Similarly, parastatal employers are required to

contribute at a specific rate to the Parastatal Pension

Schemes Fund (to which all parastatal employees are

required in law to belong) in terms of the Parastatal

Pension Schemes Act. See generally, section 30 of the

Social Security Regulatory Authority Act.

5. ARE RETIREMENT FUNDS IN TANZANIA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

In Tanzania most of the retirement funds especially

the public funds, are defined benefit retirement

funds. Some private retirement funds are defined

contribution schemes.


Retirement funds schemes in Tanzania are typically

employer-specific retirement funds.


Under the Social Security (Regulatory Authority)

Act, every employer in the formal sector is required

to register its employees with any of the mandatory

schemes, provided that it shall be the right of the

employee to choose a mandatory scheme under

which the employee shall be registered. Under the

Retirement Benefits Fund Act, the law provides that

even a foreigner or an expatriate working in Tanzania

on specific project or duration may contribute to the

fund. Foreign nationals who become employed in

Tanzania are obliged to make contributions towards

a national social security scheme.


The Social Security (Regulatory Authority) Act

establishes the mechanisms of resolving disputes within

and among retirement schemes. The Social Security

(Regulatory Authority) Act provides that where any

member or beneficiary who is aggrieved by a decision

of a scheme under laws or trust deed establishing the

respective scheme may within thirty days of receipt

of the decision apply in writing to the SSRA for review

of the decision. The Social Security Tribunal (the

“Tribunal”) is a dispute resolution forum established by

the Act with the jurisdiction to preside over appeals

against any decision of SSRA. Where any person is

aggrieved by a decision of SSRA may, within thirty days

after the decision, appeal in the prescribed manner to

the Tribunal.

The Act further provides that, a dispute between-

◾ a member or beneficiary and scheme shall be

referred to the SSRA;

◾ a scheme and a scheme shall be referred to the SSRA;

◾ a member and a manager, shall be referred to the

SSRA; and

◾ a scheme and the SSRA shall be referred to the

Social Security Tribunal.

The SSRA may, after considering the evidence and

representations submitted and making such inquiry as

it may deem necessary, confirm, amend or set aside

its decision, and may suspend, discontinue, reduce or

increase compensation awarded.



In Tanzania, retirement funds are separate legal entities

from the employers participating in the fund, or from

the sponsors who establish the fund.

The Social Security (Regulatory Authority) Act requires

that every trustee, manager or custodian ensure

that funds of the schemes are at all times managed in

accordance with the Act. Every statutory scheme

in Tanzania has a board of trustees, which deals with

the management and governance of the funds of

the scheme.

54 55

◾ real estate investment limited to 30% of the fund’s

total assets, of which non-income property is

limited to 5% of the fund’s total assets;

◾ ordinary and preference shares investment limited

to 15% of the fund’s total assets, of which private

equity is limited to 5%;

◾ infrastructure investments limited to 25% of the

fund’s total assets;

◾ deposits with licensed banks and financial

institutions with original maturity of at least six (6)

months is limited to 35% of the fund’s total assets;

◾ investment in licensed collective investment schemes

is limited to 30% of the fund’s total assets; and

◾ other investments are subject to prior approval by

the Bank of Tanzania.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS TANZANIA?

In order to provide services to retirement funds in

Tanzania, the law requires that the prospective services

provider must be registered under section 14 of the

Social Security (Regulatory Authority) Act. This section

provides that a person intending to act as manager

or custodian must submit an application to SSRA and

be approved by SSRA. The Social Security (Regulatory

Authority) Act has vested the power in the Board of the

Authority to determine how such persons will operate.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN TANZANIA?

The challenges facing the Tanzanian social security

system include uneven benefit packages among the

existing funds, inadequately regulated investment

activities, limited coverage and the role of funds in

the fight against poverty of its members. Other issues

include:

◾ Delays in payment of contributions by the

employers;

◾ Premature withdrawals;

◾ Low yields on Treasury Bills and Treasury Bonds as

compared with the levels of inflation;

◾ Delays in the process of benefit claims;

◾ Inadequacy of benefits;

◾ Limited areas of investments;

◾ Portability of benefits;

◾ Change of operating environment due to the

coming of the SSRA;

◾ Introduction of Occupational Schemes; and

◾ Low coverage of the informal sector

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN TANZANIA?

In responding to these challenges, some of these funds

have implemented parametric reforms in an attempt

to adapt to changes brought about by the changing

socio-economic environment. Consequently, the

scope and depth of benefits have increased. Others

have amended their respective legislation to cover

sectors previously not covered by these schemes. The

recent reform initiative is the formulation of Social

Security (Regulatory Authority) Bill of 2008, which

was enacted in 2008, (The Social Security (Regulatory

Authority) Act) as amended by the Social Security

Laws Amendment Act No.5 of 2012. The Social Security

(Regulatory Authority) Act established, the SSRA

which started its operation since 2011, to deal with the

management and challenges facing the Funds.

EAST AFRICAN LAW CHAMBERS

Plot No. 483 Phase II Area

Off Garden Road,

Mikocheni, Dar es Salaam

PO Box 38192

Dar es Salaam, Tanzania



In Uganda, retirement funds are currently divided

into public and private funds. The public funds are

of general application or sector-specific. Private

funds are private efforts of employers or employees.

Generally, retirement funds have to comply with the

Uganda Retirement Benefits Regulatory Authority

Act 2012 which governs the licensing of funds and

actors in the sector. Public funds are governed by the

National Social Security Act Cap 222, the Pensions Act

Cap 286 and the Armed Forces Pensions Act Cap 295.

The Income Tax Act Cap 340 and the Employment Act

2006 deal with specific issues touching on or ancillary

to retirement funds.


The regulator is the Uganda Retirement Benefits

Regulatory Authority (“the Auhority”). Its functions

relate to regulation and supervision of retirement

benefits schemes in Uganda both in the public and

private sectors. It also issues licences to the schemes,

custodians, trustees, administrators and fund managers

and approves actuaries and auditors. Further, it is

tasked with protecting members and beneficiaries of

schemes as well as promote the development of

the sector by among others ensuring and promoting

transparency, accountability, stability and integrity.

Finally, it is required to advise the Minister on matters

to do with the sector and generate awareness among

the public about the sector.


The regulator is a new entity and is empowered in its

constitutive legislation to issue guidelines for the better

carrying out of its objects and functions. The website

is – www.urbra.co.ug – where further information can

be found.


The National Social Security Fund is a compulsory

defined contribution scheme. All employees in

the country are obliged to contribute so long as the

employer meets the threshold of five employees.

Privately managed funds are either optional

or frequently, derived from an employer/employee

relationship. There are no private mandatory

occupational retirement funds for employees.

5. ARE RETIREMENT FUNDS IN UGANDA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

The retirement funds are typically defined contribution

funds rather than defined benefit funds. Given the levels

of fluctuation in currency, inflation and other factors

that create economic instability for a third world

country, the preferred position is to adopt a defined

contribution rather than defined benefit scheme.

Uganda

AF MPANGA ADVOCATES


56 57

13. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN UGANDA?

Fund managers are required to be licensed by the

Authority. They must provide a name and address,

birth date and place, demonstrate adequate

professional, technical and operational abilities,

have an address of a place in Uganda for service of

notices and other process, disentitlement and or

pending or concluded disciplinary proceedings as

well as bankruptcy issues. If the applicant is a non-

citizen then he/she must demonstrate the aggregate

period of continuous residence in Uganda during

the 12 month preceding the application date and the

aggregate period the applicant has practices as a

fund manager in a jurisdiction. A fee is payable and

a conditional licence can be granted. It is required to

demonstrate that a fund management agreement is

in place. It is also required that certified copies of the

documents satisfying the qualifications and experience

requirements are presented together with a statement

on oath verifying the facts in the application.


In terms of section 68 of the Act, funds of a scheme

cannot be used for speculative investments, lent to

any person except through securities sold on the open

market, be invested a bank, non-banking financial

institution, insurance company, building society or

other such entity with a view to securing loans or

mortgages or for any other consideration to the

trustee, custodian, administration or fund manager,

used to make direct or indirect loans to any person

or be used as security for loans, or be invested outside

East Africa or invested contrary to any guidelines

issues in respect of investments.

15. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN UGANDA?

Asset managers would have to comply with the same

legislation as fund managers. A service provider who is

not in the category of trustee, fund manager, custodian

or administrator would not require additional licensing.

However there may be industry specific regulations

that might affect the ability of a foreign insurance firm

to provide insurance services in Uganda.

RETIREMENT REFORM

16. CURRENTLY WHAT ARE SOME OF THE TALKING POINTS RELATING TO KEY ISSUES AND/OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN UGANDA?

The key issue remains the slow walk towards

liberalization of the sector. While efforts are still

underway (as they have been for at least four years

already) to liberalize the sector the move faces

significant opposition from workers’ leaders and the

National Social Security Fund, which would lose its

monopoly and advantaged status if liberalization were

introduced. Additional challenges include the lack of

properly qualified persons to hold the various positions

required in relation to schemes. The tax regime is also

fairly complex. In addition it is likely that unregulated

overheads for the management of schemes would

cause value-reduction of the schemes themselves

thereby potentially giving less to members than may be

anticipated.

17. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN UGANDA?

There are processes underway to liberalize the sector.

These processes would completely overhaul the way

the sector operates and perhaps achieve membership

based more on choice rather than legislative

requirements. Owing to the fact that the industry is

nascent, there are many ‘teething’ problems expected.

6. ARE RETIREMENT FUNDS IN UGANDA TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

The funds are more inclined towards employer specific

rather than multi-employer funds. Given the fact that

the regulator has only been in existence for about

two years and the sector is really in nascent stages,

the safer options appear to be employer specific rather

than multi-employer.

7. IN THE CASE OF FOREIGN NATIONALS WHO BECOME SECONDED TO, OR EMPLOYED IN UGANDA, IS THERE AN OBLIGATION ON THE EMPLOYER TO MAKE CONTRIBUTIONS TOWARDS A NATIONAL SOCIAL SECURITY SCHEME OR OCCUPATIONAL PENSION SCHEME IN RESPECT OF THESE EMPLOYEES?

Foreigners whose employers are based in Uganda are

required to contribute to the National Social Security

Fund which is a national fund. Contributions can

also be made to private funds on account of employer-

specific arrangements since the sector is still not

liberalized. A foreigner employed in Uganda would

have to meet the requirements of ‘employer’ as defined

in the National Social Security Act to benefit from

this regime.


Disputes are to be referred to the Authority for

review. Persons dissatisfied with the review process

or outcome can appeal to the Retirement Benefits

Appeals Tribunal set up under the Uganda Retirement

Benefits Authority Act. The Tribunal is chaired by a

person qualified to be a High Court Judge and is a five

member tribunal. Decisions from the Tribunal can be

referred to the High Court on appeal.



Fund governance is a preserve of trustees and fund

managers, both categories of office being licensed by

the Authority.


There are no restrictions in terms of composition.

The composition issues are left to be determined by

the constitutive documents.


The Act contains provisions relating to ‘fit and

proper’ tests akin to those holding offices in financial

institutions. These cover professional suitability

and previous conduct and cover the various offices

involved in the sector, including the Board of the

Authority.


The majority are administered by third party

service providers.

AF MPANGA

9th Floor, North Wing

Workers’ House

1 Pilkington Road, Kampala

PO Box 1520

Kampala, Uganda

58 59



The Pension Scheme Regulation Act No. 28 of 1996 and

the Pension Scheme Regulation (Amendment) Act No.

27 of 2005.

The Pension Scheme Regulation Bill, 2012 is intended to

repeal the Pension Scheme Regulation Act, 1996, and

put in place an Act to -

◾ continue the existence of the Pensions and

Insurance Authority and provide for its powers and

functions;

◾ to provide for the prudential regulation and

supervision of private pension schemes;

◾ to provide for the prudential supervision of public

pension schemes;

◾ to provide for the establishment of the Pension

Protection Fund;

◾ to provide for the establishment of the Pensions

and Insurance Tribunal; and

◾ to provide for matters connected with or incidental

to the foregoing.


The regulatory and supervisory authority for the

pensions and insurance industry is the Pensions

and Insurance Authority (“the PIA”). The PIA was

established in terms of section 4 of the Pension

Scheme Regulation Act no. 28 of 1996. The PIA’s

executive officer is the Registrar of Pension and

Insurance through which the PIA acts. Prior to the

enactment of the 2005 amendments to the Pension

Scheme Regulation Act, the PIA existed as the “Office

of the Registrar of Pensions and Insurance” under the

Ministry of Finance and Planning.


There is no statutory obligation on employers to

contribute to a private occupational retirement

scheme. Most employers singly or collectively

establish complementary plans as part of collective

bargaining or conditions of employment. There is a

statutory obligation to contribute to a mandatory

national social security scheme called the National

Pension Scheme Authority (“NAPSA”). NAPSA was

established after Parliament passed Act No. 40

in 1996. It was established to replace the Zambia

National Provident Fund (“ZNPF”), which has existed

since 1966. NAPSA is a defined benefit, partially

funded scheme that offers pensions based on career-

average adjusted earnings. NAPSA is a compulsory

scheme that covers regularly employed persons in the

private and parastatal sectors, and all employees who

joined the Public Service & Local Authorities on or

after 1 February 2000.

4. ARE RETIREMENT FUNDS IN ZAMBIA TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

The majority of the retirement funds registered with

the PIA are typically defined contribution funds

although there is a fair share of defined benefit and

hybrid funds.

5. ARE RETIREMENT FUNDS TYPICALLY MULTI-E MPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

The majority of the funds are multi-employer and

there are very few employer specific funds.

Zambia

BOWMAN GILFILLAN

Member of Bowman Gilfillan Africa GroupMONICA MUSONDA


Membership to NAPSA is compulsory for all employed

persons except those exempt under the National

Pension Scheme Act (NPS Act).

The following employees, among others, are eligible for

membership of NAPSA:

(a) employees engaged on a part time basis;

(b) employees on probation or a casual basis;

(c) employees engaged on a permanent basis;

(d) employees on contract;

(e) domestic workers;

(f) non-Zambians engaged by local institutions; and

(g) public service workers who joined the civil

service after 1 February 2000.

Those exempt from membership of NAPSA include the

armed forces, workers under the age of 15 and those

above 55, as well as those earning less than K15,000

(un-rebased Kwacha1 which is equivalent to US$3) per

month are excluded from membership.

Contributions are determined according to specified

scales and the employer and employee contribute 50%

each of this amount.

Where an institution has established and registered an

occupational pension scheme, it is compulsory for it

to be contributory. This means that both the employer

and employee have to make a contribution but the

ratio of their contributions depends on the rules of the

particular scheme.


The PIA performs the role of dispute resolution among

industry participants although this is not specifically

provided for in the Act. One of the proposals included

in the new Act is for a specialist dispute resolution

forum to deal with such disputes. The new Act has not

yet come into effect.



All pension funds are required to have their own board

of trustees which are responsible for fund governance.


In terms of the Act, the rules of the fund must regulate

the composition of the Fund however, 50% of the

board must comprise of member representatives and

50% shall be employer appointed. Independent trustees

are neither required nor prohibited.

In relation to NAPSA, the Pension Scheme Regulation

Act provides for the composition of its board which

shall consist of the following part-time members

appointed by the Minister:

◾ a representative of the Ministry responsible for

finance;

◾ a representative of the Ministry responsible for

labour and social security;

◾ a representative of the Bank of Zambia;

◾ a representative of Zambia association of Chambers

of Commerce and industry;

◾ a representative of the Attorney General;

◾ a representative of Zambia Institute of Certified

Accountants;

◾ a representative of Zambia Federation of

Employers;

◾ a representative of a trade union representing

workers in the insurance and pensions industries;

and

◾ one other person who shall have expertise in the

administration of pension funds, insurance or

actuarial matters.

1In January 2013, the Bank of Zambia undertook a currency rebasing exercise by dividing the existing banknotes by 1000, hence removing three zeroes from the existing K50, 000, K20, 000, K10, 000, K5, 000 and K1, 000.

60 61

RETIREMENT REFORM

15. CURRENTLY WHAT ARE SOME OF THE KEY TALKING POINTE RELATING TO ISSUES AND/ OR CHALLENGES FACING THE RETIREMENT FUND INDUSTRY IN ZAMBIA?

The Pension industry in Zambia is largely a two pillar

system – the compulsory pillar and the voluntary

pillar. All individuals employed in the formal sector

are compelled to contribute to one of the three public

schemes namely the Public Service Pension Fund

(PSPF), the National Pension Scheme (NPS) managed by

NAPSA and the LASF. This pillar is effectively not under

the supervision of the PIA.

The voluntary pension pillar is comprised of trusts that

are established by employers and are supervised by

the PIA. There were 228 registered and active pension

schemes in Zambia with a total membership of 82,782

as at the end of 2012. The combined asset-size as at the

end of 2012 was ZMW 3.2 billion. This amount grew

significantly from KMW 1.8 billion in the year 2007.

Over the same period the total number of registered

pension fund management and administration

companies remained at eleven.

In recent years growth in this industry was hampered

by a number of issues in the areas of the legal

framework, fiscal regime and investment climate.

There is currently low coverage as only a small

percentage of workers in the formal sector

are members of pension schemes and those in the

informal sector are not covered. There are a number

of small to medium sized companies with no

retirement funds in place. Where they is no pension

scheme in place for employees there is a minimum

termination benefit of three months final salary for

each year served by the employee, as provided

for under the Labour and Social Security legislation,

provided an employee has a minimum of ten years

of service and is aged 55 or older.

16. ARE THERE ANY PLANS OR DISCUSSIONS CURRENTLY TAKING PLACE TO CHANGE THE WAY THE RETIREMENT SAVING SYSTEM AND ITS REGULATION OPERATES IN ZAMBIA? IF SO, PLEASE BRIEFLY DESCRIBE THESE AND THE FORUM IN WHICH THEY ARE TAKING PLACE.

There are major pension and social security reforms

underway at a policy level. Government had engaged

the World Bank, International Labour Organization

and the International Monetary Fund to provide

independent consultants on the matter and reports

have been submitted to Government. Following

a review of three reform options, Cabinet approved

the option to reforming the pension system entirely

and to transfer all existing members, pensioners

and beneficiaries into the new system what has become

colloquially referred to as the Eagle in Flight Approach.

This approach entails the introduction of a three tier

pension system:

◾ Tier 1: Mandatory National Basic Pension with a

National Social Security Fund providing benefits at a

40% income replacement ratio (IRR). This is to cover

employees in both the private and public sector and

the fund will be structured as a defined benefit fund;

◾ Tier 2: Mandatory Occupational Pension schemes

(MOPS) providing a minimum of 20% IRR. These can

be defined benefit or defined contribution scheme.

The current local authority and public sector funds

will be restructures as MOPS for public sector

employees; and

◾ Tier 3: Voluntary Private Pension Scheme which will

provide an addition IRR of up to 20%. These will be

individual plans.


The PIA has begun to work on policy which will focus

on trustee training and risk management.


There are currently 234 registered pension funds

in Zambia and only four are self-administered

funds (namely, Kwacha, Mukuba, Local Authority

Superannuation Fund (LASF) and NAPSA Staff Pension).

The remaining 230 registered funds are administered

by third parties which includes the fund administrator

(which manages pension operations) and the

investment manager (which manages the

fund investments).

The other service providers that may be associated with

the management of a pension fund include auditors,

actuaries, lawyers and custodians.

12. WHAT ARE THE LICENSING AND OTHER APPROVAL REQUIREMENTS THAT FUND ADMINISTRATORS REQUIRE IN ORDER TO OPERATE IN ZAMBIA?

An entity seeking to provide administration services

in Zambia is required to lodge an application to be

licensed as a pension fund administrator by PIA in

terms of section 17 of the Pension Scheme Regulation

Act. It must satisfy PIA that:

◾ it is a limited liability company incorporated under

the Company’s Act whose liability is limited by

shares and one of whose objects is to undertake

administrative or secretarial functions of a pension

scheme or fund;

◾ it has such minimum paid up share capital as may

be prescribed by the board;

◾ it has the professional capacity to administer a

pension scheme;

◾ it has never been involved in administration of any

scheme which was deregistered due to any failure

on the part of the administrator; and

◾ it has shares of which not less than 51 percent

are held by Zambian citizens or by a partnership

whose partners are Zambian citizens or by a body

corporate whose shares are wholly owned by

citizens of Zambia.

If the administrator intends to offer additional

investment consulting to pension funds, it will need

to register with SEC for a dealer licence or an

investment advisor license.


The Pension Schemes Regulation Act provides that

each scheme must have an investment policy so as to

achieve secure and profitable investments.

14. WHAT ARE THE APPROVALS THAT ASSET MANAGERS AND INSURERS MUST ACQUIRE IN ORDER TO OPERATE AS SERVICE PROVIDERS TO RETIREMENT FUNDS IN ZAMBIA?

The asset manager is required to be registered as a

‘limited company’ with not less than 51% shares owned

by Zambians. Once the company is registered it may

then lodge an application to be licensed to be a fund

investment manager or asset manager by the PIA.

An asset manager needs to be approved and registered

with SEC for a dealer licence or investment advisor

license in order to carry out any asset management in

Zambia. One or more employees of the asset manager

must also attend and pass the Stockbrokers and

Investment Adviser course offered by Zambia Insurance

Business College Trust in conjunction with SEC and

Lusaka Stock Exchange. Monica Mosonda, Chairperson Kwatcha,

Pension Trust Fund

Bowman GilfillanJohannesburg165 West Street, Sandton,



South Africa

62 63

5. ARE RETIREMENT FUNDS IN ZIMBABWE TYPICALLY DEFINED BENEFIT OR DEFINED CONTRIBUTION FUNDS?

Retirement funds can be either a defined benefit

scheme or a defined contribution schemes.

6. ARE RETIREMENT FUNDS IN YOUR COUNTRY TYPICALLY MULTI-EMPLOYER (I.E. ‘UMBRELLA FUNDS’) OR EMPLOYER SPECIFIC FUNDS?

Both types exist in Zimbabwe.


The obligation to make payment to the Pension and

Other Benefits scheme rests on Zimbabwean nationals.

People who are exempt from contributing to the

Scheme are: non-Zimbabwean citizens who are not

ordinarily resident in Zimbabwe; diplomatic staff

who are non–Zimbabwean; and persons employed as

domestic workers.


No.



The board of trustees.


Statutory Instrument 323 of 1991 provides that the

Rules of a Fund shall make provision for the number of

trustees, of whom at least one-half shall be appointed

or elected by the members and the remainder shall be

appointed by the participating employers.

11. WHAT ARE THE PRIMARY PIECES OF LEGISLATION GOVERNING INVESTMENTS BY RETIREMENT FUNDS? ARE RETIREMENT FUNDS PROHIBITED FROM INVESTING IN ANY SPECIFIC ASSET OR ASSET CLASS? The Pensions & Provident Funds Act [Chapter

24:09] prescribes certain thresholds for compulsory

participation in State, Local Authority or Parastatal

issued papers or loans (not less than 35% of total

investments).

The value of loans which a Fund can advance to a single

participating employer or its subsidiary is capped at

10% of the total investments.

A fund is obliged to carry all its investments in assets

“realisable” in Zimbabwe although the Commissioner

of Insurance appears to have authority to waive this

condition (see section 18(1) of Chapter 24:09)



Retirement funds are mainly governed by:

◾ Chapter 24:09 Pension and Provident Funds Act:

which provides for the registration, incorporation,

regulation and dissolution of pension and

provident funds

◾ Chapter 16:02 Pensions (Increases and Adjustments)

Act: which provides for the increase in certain

pensions and allowances payable by the State

◾ Chapter 16:01 Pensions and Other Benefits Act:

which governs benefits for members of public

service and benefits for members of uniformed

forces

◾ Chapter 24:09 Pension and Provident Funds

Regulations, 1991

◾ Chapter 17:04 National Social Security Authority

Act: which provides for the establishment of social

security schemes for the provision of benefits for

employees; establishes the National Social Security

Authority


(Pension & Other Benefits Scheme) (Rates of

Benefits) Notice, 1994


(Pension and Other Benefits Scheme) (Registration

and Contribution) Notice, 1994: these regulations

state that every person who is gainfully

employed in Zimbabwe in any profession, trade

or occupation, other than persons employed in

the service of the State or as domestic workers in

private households, shall be liable to register and

be liable to contribute


(Pension & Other Benefits Scheme) (Rates of

Benefits) Notice, 1993: these regulations govern

the establishment of pension and other benefits

scheme.

◾ Chapter 24: 21 Insurance and Pensions Commission

Act, 2001.


The Insurance and Pensions Commission.


This is done through the office of the Zimbabwe

Association of Pension Funds who will disseminate the

information to individual schemes.


It is mandatory to contribute to the National Social

Security Authority (Pension and Other Benefits

Scheme).

Zimbabwe

BOWMAN GILFILLAN


Johannesburg165 West Street, Sandton,



South Africa

64 65

BW 3

892/

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