Penalties of up to R5-million per day are amongst several hard-hitting measures introduced to curb mismanagement in the retirement industry, which has been rocked by scandal in recent months.
These measures were introduced in amendments to the Pension Funds Act, as of 13 September 2007, when the Registrar's powers were dramatically increased.
The amendments aim to deal with instances of poor governance, conflicts of interest and non-compliance with the Act (among other things). The Registrar's new powers may be used against trustees of retirement funds, administrators and other service providers.
In addition to the administrative penalty (similar to a fine) of up to R5 million per day of non-compliance, the Registrar's enhanced powers include the jurisdiction to replace any trustee who is not 'fit and proper' to fulfill the role, to suspend or withdraw the approval of an administrator, and to "name and shame" a fund, administrator or other service provider by way of publication in the media if this is in the interest of the public."
"We believe that these amendments to the Act, will ultimately be to the benefit of all concerned, provided that the Registrar's powers are exercised appropriately" comments Samantha Davidson of Shepstone & Wylie's Pension Law Department. "It is critical that government takes a firm and visible stand against misconduct in the industry, where so much is at stake for members of the public and other stakeholders in the retirement fund industry".
She says that the changes are particularly pertinent given the fact that for many South Africans, their retirement savings are their most valuable asset, worthy of proper protection.