On 27 January 2023, the Minister of Finance repealed Regulation 33 which sets out requirements relating to the payment of contributions by employers to Pension Funds in terms of section 13A of the Pension Funds Act (PFA). Section 13A places certain obligations upon participating employers of Retirement Funds to pay contributions and submit minimum information within prescribed timelines.

Whilst the provisions set out in section 13A of the PFA remain unchanged, Regulation 33 will be replaced by the Conduct Standard 1 of 2022 (Conduct Standard) titled “Requirements related to the payment of pension fund contributions”, published by the Financial Sector Conduct Authority (FSCA) on 19 August 2022, which takes effect on 20 February 2023.

The Conduct Standard sets out requirements related to the payment of pension fund contributions which mirror those contained in Regulation 33, as well as additional measures to remedy shortcomings in Regulation 33.

The Conduct Standard also introduces a new penalty interest that is payable by an employer for any unpaid or underpaid contributions, namely prime plus 2%. Retirement Funds will also be required to recover arrear contributions from participating employers. The Conduct Standard allows for this function to be outsourced to an attorney or third party. The Fund’s Board of Trustees will therefore be required to formulate policies and procedures to account for this process.

In addition to the current compulsory information provided by a participating employer in the monthly contribution schedules, below are the new mandatory requirements:

Initial contribution schedule requirements:

An employer will, as part of the minimum information to be furnished to a Retirement Fund in the initial contribution schedule, be required to include the following additional information relating to each employee:

• employee’s SA ID number (or Passport number) and employee number,

• both percentage and amount of contributions,

• income tax number,

• contact number and, where available, cell phone number,

• email address (where available),

• postal address; and

• residential address,

• membership number.

Identity of the responsible person:

The employer will also be required to include in the initial contribution schedule, the identity of the responsible person envisaged in section 13A (8) of the PFA, who will be held personally liable if they don’t comply with section 13A.

Subsequent monthly contribution schedules:

All participating employers will be required to submit complete contribution extracts each month containing all the minimum information to be furnished to a Retirement Fund by an employer.

The subsequent contribution schedules must include all the minimum information that is required for the initial contribution schedule as well as the membership number allocated to each member by the Retirement Fund. The information on the identity of the “responsible person” at the employer will only be required on the subsequent contribution schedule if the identity of the person has changed from the previous contribution schedule.

Declaration by the employer:

All participating employers will be required to provide a declaration in the initial and monthly contribution schedule, in which they declare that all employees eligible to be members of the Funds are accurately reflected in the minimum information set out in the contribution schedules.

Non-compliance:

It is important to emphasise that in terms of section 37 of the PFA, any person who contravenes or fails to comply with section 13A which now includes the requirements set out in the Conduct Standard is guilty of an offence and liable on conviction to a fine not exceeding R10 million or imprisonment for a period not exceeding 10 years, or both a fine and imprisonment.

It is anticipated that the Conduct Standard will assist in eradicating employer non-compliance with their obligations as outlined in the PFA. This, however, will only be achieved through the collaboration of all the relevant stakeholders as well as strict compliance and application of the Conduct Standard.

Employers are encouraged to take note of their obligations set out in the Conduct Standard and to ensure that they have the necessary information required to be submitted as part of the contribution schedules, and if not, to obtain the information as soon as possible.