Lize de la Harpe, Senior Legal Advisor at Sanlam Corporate
Introduction
It has been nearly a month since the Two-Pot System came into effect. The FSCA has noted concerns regarding the differences in fees being charged by fund administrators for withdrawals from the savings component under the new Two-Pot system.
As such, the FSCA on 13 September 2024 published an Information Request (IR 2 of 2024) with the purpose of assessing the impact of these fees and charges and gaining a better understanding of the structure thereof.
Background
The object of the board of trustees as set out in section 7C of the Pension Funds Act, 1956 is to direct, control and oversee the operations of the fund in accordance with the applicable law and the rules of the fund. This includes ensuring that it takes all reasonable steps to ensure that the trustees act in the best interest of the fund and its members.
Accordingly, the trustee must ensure that reasonable fees are charged for, among others, withdrawals from the savings component in terms of the Two-Pot System.
Information Request 2 of 2024
The FSCA is requesting administrators for information (as set out in Annexure A to the Information Request) detailing the following:
a) Estimated costs incurred to administer the Two-Pot system, including adapting systems, staff training, member communication and additional call centre capabilities.
b) Estimated set up costs, including number of members under administration.
c) Fidelity cover and measures implemented to mitigate the risk of fraudulent claims from the savings component.
d) Details of increases in administration fees, including how these costs will be apportioned and recouped.
e) Details of transactional fees, including how these costs will be apportioned and recouped.
f) Details on capabilities implemented to submit savings withdrawal requests (mobile, whatsapp, member portals, etc).
Conclusion
Fund administrators have until 30 September 2024 to respond to the Information Request which is available on the FSCA’s website. The FSCA will publish the findings of the request in due course.
ENDS
