pension Guide You see potential. We ll think implementation.

Transcription

1 pension Guide You see potential. We ll think implementation.

2 Our horizons are as broad as your business vision.

3 The Bowman Gilfillan Africa Group Contents 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

4 Pension Funds in Africa 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. 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.

5 Botswana BOOKBINDER BUSINESS LAW Member of Bowman Gilfillan Africa Group 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 offbalance sheet transactions; insurance arrangements; outsourcing and risk management. 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 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 multiemployer 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. 4 5

6 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 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 selfadministered 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 P and a supervisory levy of P 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 noncompliance; 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

7 Egypt 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? 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? BOWMAN GILFILLAN Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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 selfemployed 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. 2. Who is the industry regulator? 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 ( provides general supervision. 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 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 Further information can also be obtained on the National Social Insurance Authority s website at as well as the Minister of Finance s website at 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? 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 selfemployed. 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 payas-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. 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. 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 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. FUND GOVERNANCE AND ADMINISTRATION 8. Which is the entity responsible for fund governance? 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. 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 Gilfillan Johannesburg 165 West Street, Sandton, Johannesburg, South Africa Cape Town 22 Bree Street, Cape Town South Africa 8 9

8 Ghana Bentsi-Enchill, Letsa & Ankomah RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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. 2. Who is the industry regulator? 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 ). 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 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 Guidelines, rules, notices or directives issued by the SEC are also binding on pension fund managers and fund custodians. 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? 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. 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? 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. 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

9 FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? 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. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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. 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)? 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) (b) Be issued in writing by an authorised financial institution or authorised insurer; 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. 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 selfadministered 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. 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 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

10 15. What are the approvals that asset managers and insurers must acquire in order to operate as service providers to retirement funds in Ghana? 17. Are there any plans or discussions currently taking place to change the way the retirement saving system and its regulation operates in Ghana? Ivory Coast 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. 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 John W Ffooks & Co Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? Retirement schemes are governed by following: Law No dated August 2, 1999 relating to social security code amended by Order No dated January 11, 2012; Order No dated April 4, 2012 relating to the organization of pensions schemes and its implementing Decree No dated April 18, 2012 ; Decree No 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 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 ) 2. Who is the industry regulator? 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. 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 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: 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? 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

11 6. Are retirement funds typically multiemployer (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 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 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. FUND GOVERNANCE AND ADMINISTRATION 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 selfadministered 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. 12. 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? 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 Kenya COULSON HARNEY Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? The main statute governing retirement funds and investments by retirement funds is the Retirement Benefits Act, 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 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, Who is the industry regulator? 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

12 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 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 ( regulatory-framework). They can also be accessed at the RBA offices. 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? 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 twotiered. 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 employerspecific. 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. 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? 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 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

13 FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? 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. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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. 12. Are most retirement funds selfadministered or are they administered by third party service providers? 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. 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 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, 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

14 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? Madagascar Some of the challenges perceived by different stakeholders in the retirement fund industry include 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. COULSON HARNEY 5th Floor, ICEA Lion Centre, West Wing, Riverside Park, Chiromo Road, Nairobi JOHN W FFOOKS & CO Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? Retirement funds are governed by Law No dated December 17, 1968 and Law No dated July 29, There is no specific legislation in Madagascar that governs investments by retirement funds. 2. Who is the industry regulator? 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). 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 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 EN/index.php 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? 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

15 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. 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 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). FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? 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. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? The CNAPS s board is composed of an employer representative, an employee representative and representatives from the Ministry of Labour and Ministry of Finance. 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)? There are no such initiatives currently. 12. Are most retirement funds selfadministered or are they administered by third party service providers? 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. 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? 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 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

16 Mauritius BOWMAN GILFILLAN Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? Private and occupational retirement funds are mainly governed by the Private Pension Schemes Act 2012 and the National Pensions Act Who is the industry regulator? 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 Since 2012, the FSC has become the main regulator of Private Pensions Schemes. 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? These can be viewed at the offices of the FSC in Ebene and online at The Mauritius Revenue Authority also issues regulations under the Income Tax Act and these are also accessible at 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? 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. 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. FUND GOVERNANCE AND ADMINISTRATION 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. 9. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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. 11. Are most retirement funds selfadministered or are they administered by third party service providers? 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 license has been suspended, revoked or otherwise terminated; 26 27

17 an officer of any body corporate which is a mortgagee of the property of the person whose license has been suspended, revoked or otherwise terminated. 13. 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 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 In addition, the new regulatory and supervisory framework is driven by international best practices and principles developed by OECD and IOPS. BOWMAN GILFILLAN Johannesburg 165 West Street, Sandton, Johannesburg, South Africa Tel Cape Town 22 Bree Street, Cape Town South Africa Tel Mozambique BOWMAN GILFILLAN Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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 Who is the industry regulator? 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. 3. 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? 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. 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? There is no specialised dispute resolution forum for retirement fund disputes. General Mozambican labour and/or commercial law applies

18 FUND GOVERNANCE AND ADMINISTRATION 8. Which is the entity responsible for fund governance? 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. 9. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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. 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 your country (e.g. compulsory trustee training; suitability or fit and proper criteria for fund trustees; risk management and so on)? 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. 11. Are most retirement funds selfadministered or are they administered by third party service providers? 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 economicfinancial 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 ,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. 13. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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 BOWMAN GILFILLAN Johannesburg 165 West Street, Sandton, Johannesburg, South Africa Cape Town 22 Bree Street, Cape Town South Africa 30 31

19 Namibia EBL Consulting RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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 Who is the industry regulator? 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. 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 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 ( 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 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. 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. 6. Are retirement funds typically multiemployer (i.e. umbrella funds ) or employer specific funds? 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 multiemployer 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 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 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. FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? 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. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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

20 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. 12. Are most retirement funds selfadministered or are they administered by third party service providers? Most of the retirement funds are administered by third party service providers; however the larger employerspecific 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. 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 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-Chimunda EBL CONSULTING South Africa 27 Lina Estates, Wilgelbom Street Boskruin Namibia PO Box 98750, Pleican square, Windhoek, Namibia 34 35

21 Nigeria Udo Udoma & Belo-Osagie RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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. 2. Who is the industry regulator? 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. 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 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 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? 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. 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 commencement 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. 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? 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. FUND GOVERNANCE AND ADMINISTRATION 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

22 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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. 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)? 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. 12. Are most retirement funds selfadministered or are they administered by third party service providers? 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. 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 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. 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. Udo Udoma & Belo-Osagie St. Nicholas House (10th & 13th Floors) Catholic Mission Street, Lagos PO Box (Ikoyi), Nigeria 38 39

23 Senegal John W Ffooks & Co Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? Retirement funds are governed by the following laws: Decree No dated April 24, 1975 requiring employers to affiliate the employees to a pension plan (the Decree ); Decree No dated January 19, 1976 amending the Decree ; Law No 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 ); Decree No implementing Law No ; Law No dated April 03, 1975 on the social security institutions; Law No dated December 1st, 1997 on the labour law; and Ordinance No dated 09 March 1978 creating a pension institution, the Institution de prévoyance retraite du Sénégal ( IPRES ). 2. Who is the industry regulator? 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. 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 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: and 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? 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. 6. Are retirement funds typically multiemployer (i.e. umbrella funds ) or employer specific funds? There is only one retirement scheme in the private sector. 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. 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? A dispute in relation to a retirement fund can be dealt with through amicable settlement facilitated through IPRES, or a court of law. FUND GOVERNANCE AND ADMINISTRATION 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. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? It is required that the board of directors of the IPRES holds representation of both employers and employees. 11. Are most retirement funds selfadministered or are they administered by third party service providers? 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. 13. 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? 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. JOHN W FFOOKS & CO Immeuble Assist 1st floor Ivandry Antananarivo 101 Madagascar 40 41

24 Seychelles Bowman Gilfillan Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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. 2. Who is the industry regulator? 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. 3. 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? 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? 5. Are retirement funds typically multiemployer (i.e. umbrella funds ) or employer specific funds? 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. 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 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. FUND GOVERNANCE AND ADMINISTRATION 8. Which is the entity responsible for fund governance? 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. 9. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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 selfadministered 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. The SPFA is a defined benefit scheme

25 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? 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. BOWMAN GILFILLAN Johannesburg 165 West Street, Sandton, Johannesburg, South Africa Cape Town 22 Bree Street, Cape Town South Africa South Africa BOWMAN GILFILLAN Member of Bowman Gilfillan Africa Group 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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 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. 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? 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

26 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 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. 6. Are retirement funds typically multiemployer (i.e. umbrella funds ) or employer specific funds? 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 multiemployer 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. 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? 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. FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? 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. 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)? 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. 12. Are most retirement funds selfadministered or are they administered by third party service providers? 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. 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

27 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 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. 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? 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. 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 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. 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. 16. Currently what are some of the talking points relating to key issues and/or challenges facing the retirement fund industry in South Africa? Some of the challenges perceived by different stakeholders in the retirement fund industry include 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 BOWMAN GILFILLAN Johannesburg 165 West Street, Sandton, Johannesburg, South Africa Cape Town 22 Bree Street, Cape Town South Africa 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

28 Swaziland Tilungile Ntshalintshali and Fayiya Tengbeh RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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 Who is the industry regulator? 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. 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 RIRF issues circulars, directives and public warnings and notices. These can be found on the FSRA website at: 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? 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. 6. Are retirement funds typically multiemployer (i.e. umbrella funds ) or employer specific 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. 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? 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. 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? 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. FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? All retirement funds are governed by a management board. Members of the management board are known as trustees. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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). 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)? 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. 12. Are most retirement funds selfadministered or are they administered by third party service providers? 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

29 13. What are the licensing and other approval requirements that fund administrators require in order to operate in Swaziland? 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 Tanzania All fund administrators must register and be licenced with the RIRF in terms of the Retirement Funds Act. 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 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? 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 EAST AFRICAN LAW CHAMBERS Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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). 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. Some of the challenges perceived by different stakeholders in the retirement fund industry include 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; 2. Who is the industry regulator? 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 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 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 52 53

30 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. 6. Are retirement funds typically multiemployer (i.e. umbrella funds ) or employer specific funds? Retirement funds schemes in Tanzania are typically employer-specific retirement funds. 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? 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. 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? 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. FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? 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. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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. 12. Are most retirement funds selfadministered or are they administered by third party service providers? 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. 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? 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; 54 55

31 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%; 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; Uganda 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; 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 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 Dar es Salaam, Tanzania AF MPANGA ADVOCATES Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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. 2. Who is the industry regulator? 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. 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 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 where further information can be found. 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? 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

32 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 employerspecific 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. 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? 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 AND ADMINISTRATION 9. Which is the entity responsible for fund governance? Fund governance is a preserve of trustees and fund managers, both categories of office being licensed by the Authority. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? There are no restrictions in terms of composition. The composition issues are left to be determined by the constitutive documents. 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)? 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. 12. Are most retirement funds selfadministered or are they administered by third party service providers? The majority 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 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 noncitizen 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. 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? 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? 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. AF MPANGA 9th Floor, North Wing Workers House 1 Pilkington Road, Kampala PO Box 1520 Kampala, 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

33 Zambia 6. 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? FUND GOVERNANCE AND ADMINISTRATION 8. Which is the entity responsible for fund governance? All pension funds are required to have their own board of trustees which are responsible for fund governance. Bowman Gilfillan Member of Bowman Gilfillan Africa Group Monica Musonda RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? The Pension Scheme Regulation Act No. 28 of 1996 and the Pension Scheme Regulation (Amendment) Act No. 27 of 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. 2. Who is the industry regulator? 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 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. 3. 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 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 It was established to replace the Zambia National Provident Fund ( ZNPF ), which has existed since NAPSA is a defined benefit, partially funded scheme that offers pensions based on careeraverage 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 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. 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) (c) (d) (e) (f) (g) employees on probation or a casual basis; employees engaged on a permanent basis; employees on contract; domestic workers; non-zambians engaged by local institutions; and public service workers who joined the civil service after 1 February 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 Kwacha 1 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. 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 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. 9. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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. 1 In 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,

34 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 your country (e.g. compulsory trustee training; suitability or fit and proper criteria for fund trustees; risk management and so on)? The PIA has begun to work on policy which will focus on trustee training and risk management. 11. Are most retirement funds selfadministered or are they administered by third party service providers? 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. 13. 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 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. 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 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 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. Monica Mosonda, Chairperson Kwatcha, Pension Trust Fund Bowman Gilfillan Johannesburg 165 West Street, Sandton, Johannesburg, South Africa Cape Town 22 Bree Street, Cape Town South Africa 62 63

35 Zimbabwe 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. FUND GOVERNANCE AND ADMINISTRATION 9. Which is the entity responsible for fund governance? The board of trustees. Bowman Gilfillan Member of Bowman Gilfillan Africa Group RETIREMENT LANDSCAPE 1. What are the primary pieces of legislation that govern retirement funds and investments by retirement funds? 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 Chapter 17:04 National Social Security Authority (Pension & Other Benefits Scheme) (Rates of Benefits) Notice, 1994 Chapter 17:04 National Social Security Authority (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, Who is the industry regulator? The Insurance and Pensions Commission. 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? This is done through the office of the Zimbabwe Association of Pension Funds who will disseminate the information to individual 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? 6. Are retirement funds in your country typically multi-employer (i.e. umbrella funds ) or employer specific funds? Both types exist in Zimbabwe. 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? 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. 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? No. 10. What are the legal requirements (if any) regarding the composition of that entity (for example, equal representation for employer and employee)? 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) Chapter 17:04 National Social Security Authority (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 It is mandatory to contribute to the National Social Security Authority (Pension and Other Benefits Scheme). Johannesburg 165 West Street, Sandton, Johannesburg, South Africa Cape Town 22 Bree Street, Cape Town South Africa 64 65

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