ARRANGEMENT OF SECTIONS
SECTION
PART I
Preliminary
1. Short title
2. Interpretation
PART II
Licensing of Funds
3. Prohibition of operating fund without licence
4. Requirement for licensing fund
5. Issue of licence
6. Effect of licensing
7. Fund rules
8. Amendment of fund rules
9. Payment of contributions
10. Special provisions relating to multi-employer and individual retirement fund
11. Special provisions relating to external fund
12. Special provisions relating to beneficiary fund
13. Special provisions relating to preservation fund
PART III
Governance of Funds and Funds Administrator
14. Board of trustees
15. Object of board of trustees
16. Duties of board of trustees
17. Principal office
18. Principal officer and representative
19. Duties of principal officer
20. Termination and resignation of controllers
21. Appointment of auditor, actuary, fund administrator, custodian, asset manager or investment advisor
22. Termination or resignation of auditor, actuary, fund administrator, custodian, asset manager or investment advisor
23. Licensing requirements of fund administrator
24. Duties of fund administrator
25. Governance of fund administrator
26. Appointment and termination of service providers by auditor, fund administrator, etc.
PART IV
Financial Requirements
27. Financial statements by fund administrator
28. Duty to establish measures to prevent money laundering and financing of terrorism
29. Duty to report financial crime
30. Accounts of fund
31. Holding of assets
32. Investigations by actuary
33. Financial condition of fund
34. Investments
PART V
Statutory Management, Termination and Winding Up
35. Appointment of statutory manager
36. Duties of statutory manager
37. Tenure of statutory manager
38. Appointment of curator trustee
39. Tenure of curator trustee
40. Termination of fund
41. Winding up of fund
42. Winding up of sub-fund
43. Winding up of individual retirement fund
44. Liquidation of licensed fund
PART VI
Amalgamations and Transfers
45. Amalgamation and transfer
46. Notice of intention to amalgamate or transfer
47. Certificate to amalgamate or transfer
48. Effects of amalgamation or transfer
PART VII
Provisions Relating to Pension Benefits
49. Benefits not reducible, transferrable or cedable
50. Exclusion from member’s estate
51. Disposition of lump sum benefits on death of member
52. Deductions from member’s benefits
53. Unclaimed benefits
54. Minimum benefits
PART VIII
Miscellaneous Provisions
55. Application for extensions
56. Right to obtain copies of, or to inspect and retain documents
57. Effect of certification of Regulatory Authority on documents
58. Service of process
59. General prohibitions
60. Investigations and inspections
61. Enforcement of rights of members
62. Inspection of documents
63. Penalties
64. Administrative rules
65. Regulations
66. Repeal of Cap. 27:03
67. Transitional and savings provisions
Act 27, 2014,
S.I. 30, 2017,
Act 38, 2022,
S.I. 138, 2022.
An Act to provide for the continuation of licensing, regulation and administration of all retirement funds, including pension and provident funds, funds administrators; and for matters incidental to or connected therewith.
[Date of Commencement: 14th October, 2022]
PART I
Preliminary (ss 1-2)
This Act may be cited as the Retirement Funds Act.
In this Act, unless the context otherwise requires—
"accrued benefit" means a benefit that a member has earned based on the membership of the fund that is payable to the member as prescribed in the Income Tax Act (Cap. 52:01);
"actuarial surplus" means (a) - {(b) + (c)}, where—
(a) "(a)" is the value that the actuary has placed on the assets of the fund;
(b) "(b)" is the value that the actuary has placed on the liabilities of the fund in respect of pensionable service accrued by members prior to the valuation date, together with the value of those contingency reserve accounts which are established, or which the board deems prudent to establish; and
(c) "(c)" is the difference between—
(i) the present value of the liabilities of the fund in respect of pensionable service after the valuation date, and
(ii) the present value of future retirement funding contributions, if the value in subparagraph (i) is more than that under this subparagraph, and zero or otherwise;
"actuary" means an associate or a fellow of a professional actuarial body that is a member of the International Actuarial Association, or such other body as may be approved by the Regulatory Authority;
"administration services" means those services that are performed by the fund administrator in accordance with the provisions of this Act, its Regulations, the scheme trust deed, rules and any other legal documents related to the fund and instrument of appointment of the administrator, which may include—
(a) retirement consultancy services;
(b) retirement counselling;
(c) retirement financial planning; and
(d) any other related services as approved by the Regulatory Authority;
"annuity" means a regular payment, which may be monthly, or less regularly, but at least once a year for—
(a) a fixed period;
(b) a period defined in the contract or the rules; or
(c) the balance of the lifetime of one or more beneficiaries;
"auditor" means an auditor registered with the Botswana Institute of Chartered Accountants and the Botswana Accountancy Oversight Authority;
"beneficiary" means a nominee of a member or a dependent who is entitled to a benefit as provided for in the rules of the relevant fund;
"beneficiary fund" means a fund which is established with the object of receiving, administering, investing and paying benefits on behalf of beneficiaries;
"board of trustees" means the governing body of a fund;
"board of trustees member" means a member of a board of trustees;
"Botswana Accountancy Oversight Authority" means the Authority established under the Financial Reporting Act (Cap. 46:10);
"Botswana Institute of Chartered Accountants" means the Institute that is established under the Accountants Act (Cap. 61:05);
"child" means a person below the age of 18 years;
"controller", other than an employer, in relation to—
(a) a fund means—
(i) a trustee of a governing body,
(ii) a principal officer,
(iii) a representative in respect of an external fund,
(iv) a risk officer,
(v) a compliance officer,
(vi) an anti-money laundering officer, and
(vii) any other senior manager of the fund as approved by the Regulatory Authority; and
(b) a fund administrator means—
(i) a person who is in a position to control or exert significant influence over the business or financial operations,
(ii) a director or member of a board of directors,
(iii) a person who has the power to appoint another person to be a director or member of a board of directors,
(iv) a person whose consent is needed for the appointment of another person as a director,
(v) a person who holds at least 20 per cent of the shares of the fund administrator,
(vi) a person who has the power to control at least 20 per cent of the voting rights attached to shares or other securities of the fund administrator,
(vii) a person who holds rights in relation to the fund administrator that, if exercised, would result in that person holding at least 20 per cent of the shares of the fund administrator,
(viii) if the fund administrator is a subsidiary of another person, a person who is a controller of the parent or controlling body, and
(ix) a person declared by the Regulatory Authority to be a controller of a fund administrator and written notice of the declaration is given to the person, but a Minister or the Regulatory Authority, shall not be a controller of a fund administrator;
"curator trustee" means a person who has the care, the control and power of administration of fund assets, including title deeds and securities, in trust and in the name of the fund;
"custodian" means a person approved by the Regulatory Authority responsible for the safe keeping of pension assets in trust on behalf of members;
"deferred member" means a member of a fund who no longer contributes to the fund but who has preserved pension rights with the fund;
"defined contribution fund" means a fund in which—
(a) each member receives a retirement benefit which is not guaranteed and which has a value equal to the balance on the member’s retirement in that member’s individual account; and
(b) any pension payable on retirement must be fully secured either through an annuity policy owned by the fund or through an annuity policy purchased in the name of the member, after which purchase the fund has no obligation towards the member;
"dependent" means—
(a) any person to whom a member is liable for maintenance;
(b) a factual dependent;
(c) a person to whom a member is not liable for maintenance, but who—
(i) in the opinion of the board of trustees, was dependent on the member for maintenance at the time of death of the member,
(ii) is the spouse of the member, or
(iii) is a child of the member, including a posthumous child; or
(d) a person in respect of whom a member would have become liable for maintenance, had the member not died;
"due date", in relation to—
(a) a member, means the date on which the member becomes entitled to his or her pension benefits which shall be the date of the member’s resignation, termination, or retirement from employment; and
(b) a beneficiary becoming entitled to the pension benefits, means the date of the death of a fund member;
"employer" means an employer participating in the fund by contributing to a fund in terms of the fund rules;
"external fund" means a fund which has a head office outside Botswana, but does not include a fund which, though its head office is outside Botswana, 50 per cent or more of its membership consists of persons normally resident in Botswana;
"factual dependent" means a person who was financially dependent on the member at the time of the member’s death;
"financial services law" has the same meaning assigned to it under the Non-Bank Financial Institutions Regulatory Authority Act (Cap. 46:08);
"fund" means any scheme or arrangement, whose principal object is to provide a benefit for a person who is or has been a member of the scheme or arrangement, upon retirement on account of age or ill health, or upon a person completing a fixed period of service of not less than five years, whether or not such scheme or arrangement—
(a) also provides a benefit for dependents or nominees of a deceased member;
(b) also provides a benefit on the death of a member’s spouse, child and parent;
(c) also provides a benefit for a member on a temporary or permanent disablement; or
(d) continues to admit members or to receive contributions, and includes any retirement fund established in terms of any enactment:
Provided that a scheme or arrangement which is established to benefit only one member or his or her dependent shall not be regarded as a fund;
"fund administrator" means a person who provides administration services to the fund;
"fund business" means any business carried on under a scheme or arrangement established with the object of providing annuities or lump sum payments to a person who belongs or belonged to a class of persons for whose benefit that scheme or arrangement has been established, when the person reaches his or her retirement age, or for dependents and beneficiaries of such person upon the person’s death;
"fund rules" means the rules applicable to a fund as approved by the Regulatory Authority, and include—
(a) any document by or in terms of which the fund is established; and
(b) the provisions relating to the conduct of the business of the fund, the benefits which may be granted from the fund and the contributions which are payable to the fund;
"independent trustee" means a person who meets the requirements set down by the Regulatory Authority for appointment to the board of trustees, as an independent trustee;
"individual retirement fund" means a fund which a person applies to join in his or her individual capacity, subject to such conditions as may be determined by the board of trustees in terms of the rules, which eligibility to membership is not dependent on an employer-employee relationship, and includes a retirement annuity fund and a fund designed to facilitate the preservation of benefits on leaving employment in circumstances other than retirement;
"investment advisor" has the same meaning assigned to it under the Securities Act (Cap. 56:08);
"licensed fund" means an entity which is licensed under this Act to carry on the business of a fund;
"liquidator" means a person appointed to a fund or a fund administrator, in which the fund or fund administrator is being wound up, and who has the responsibility for collecting all assets of the fund or fund administrator and settling all claims against the fund or fund administrator before they are put into dissolution;
"member" means a person who is admitted to the membership of a fund in terms of the rules, but does not include any member or former member whose membership has been terminated in terms of the rules;
"multi-employer fund" means a fund that has more than one participating employer;
"nominee" means a person, other than a dependent, nominated by a member as beneficiary under a fund;
"participating employer" means an employer who participates and contributes in a multi-employer fund;
"pension" means an annuity acquired through a pension fund or an insurance company and pension benefit as determined by the Income Tax Act, which the person would be entitled to on retirement;
"pension fund" means a fund in terms of which its principal object is to provide for the payment to a person who is or has been a member of the fund, on his or her retirement;
"pensioner" means a member of a fund who has retired and is in receipt of an annuity being paid from the fund;
"preservation fund" means a pension or provident fund into which the accrued fund benefits of an employee who leaves the service of an employer due to dismissal, retrenchment or resignation, or in the event of the dissolution of the employer’s pension or provident fund, may be invested;
"principal office" means the principal place of doing business or keeping records of a fund or fund administrator;
"principal officer" means a person responsible for the daily operations of a fund, and such duties and responsibilities as statutorily specified;
"provident fund" means a fund which is not a pension fund, which permits a person who is or has been a member of the fund, on his or her retirement, to take his or her benefit as a cash lump sum;
"Regulatory Authority" means the Non-Bank Financial Institutions Regulatory Authority established under the Non-Bank Financial Institutions Regulatory Act;
"retirement annuity fund" means a pension fund—
(a) established for the sole purpose of providing life annuities for the members of the fund or annuities for the dependents or nominees of the deceased members; or
(b) whose fund rules satisfy the requirement of such a fund as defined in the Income Tax Act and in which no employer-employee relationship is required before a person is eligible to become a member;
"retirement date" means the date upon which the member becomes eligible to draw a retirement benefit;
"retirement fund" means any fund provided for purposes of retirement under this Act;
"sponsor" means an organisation which—
(a) is responsible for establishing a multi-employer fund or an individual retirement fund;
(b) promotes participation by new employers or members in the fund; and
(c) may perform such services for the fund as are set out in the rules or are described in an agreement between the organisation and the fund;
"stakeholder" means—
(a) an employer or employee who participates in a fund; or
(b) a member or former member of a fund whom the board of trustees determines should be treated as a stakeholder;
"sub-fund" means a fund established by a participating employer who contributes to a multi-employer fund and has been admitted to participate in the multi-employer fund under the multi-employer fund rules;
"switch instruction" means an instruction issued by the board of trustees to asset managers instructing them to move funds already invested from one type of investment to another; and
"unclaimed benefit" means any pension benefit that is due to a retirement fund member or his or her beneficiaries that has remained unclaimed or unpaid for a period exceeding 24 months from the due date.
PART II
Licensing of Funds (ss 3-13)
3. Prohibition of operating fund without licence
(1) A person shall not carry on the business of a fund without a licence issued by the Regulatory Authority.
(2) A person who contravenes this section commits an offence and is liable to a fine of P2 500 for each day the offence occurs, or to imprisonment for a term not exceeding five years, or to both.
4. Requirement for licensing fund
A person who wishes to carry on the business of a fund shall make an application to the Regulatory Authority, which application shall be accompanied by—
(a) three copies of the fund rules; and
(b) such fee as may be prescribed.
The Regulatory Authority may issue to a person, a licence to carry on the business of a fund if it is satisfied that—
(a) the fund rules are consistent with this Act;
(b) the fund will maintain a sound financial position;
(c) the fund will be managed by a board of trustees that will carry on the activities of the fund with integrity, prudence and professional skill;
(d) the licensing of the fund will not be contrary to the public interest; and
(e) the application complies with any other conditions as may be prescribed.
(1) A fund shall, upon being issued with a licence, become a body corporate capable of suing and being sued in its own name, and of doing or performing all such acts or things as may be necessary or incidental to the exercise of its powers, or the performance of its functions in terms of its rules.
(2) Notwithstanding anything to the contrary in any written law, the memorandum, articles of association, constitution or rules of a body having control of the business of a fund, all assets, rights, liabilities and obligations pertaining to the business of a fund shall be deemed to be assets, rights, liabilities and obligations of the fund to the exclusion of any other person.
(3) A person shall not have a claim on the assets or rights, or be responsible for any liabilities or obligations of the fund under subsection (2), except in so far as the claim has risen or the responsibility has been incurred in connection with transactions relating to the business of the fund.
(4) The assets, rights, liabilities and obligations of a fund, including any assets held by any person in trust for the fund, existing immediately before the licensing of the fund, shall vest in and devolve upon the fund without any formal transfer or cession.
(1) The fund rules shall—
(a) state the name of the fund;
(b) state the type and purpose of the fund; and
(c) comply with such requirements as may be determined by the Regulatory Authority.
(2) The requirements to be determined under subsection (1)(c) may include the—
(a) membership of a fund, including the conditions for eligibility, admission to and termination of membership;
(b) contributions to be paid into a fund, whether compulsory or otherwise;
(c) benefits to be payable from a fund;
(d) commutation of any pension;
(e) appointment or election of board of trustees’ members and their powers and duties;
(f) dissolution of a fund, including the appointment and powers of a liquidator, and the duty of the liquidator and actuary, where appropriate, to recognise the rights and reasonable expectations of the members in relation to service prior to the liquidation date;
(g) amendment or replacement of the rules;
(h) transfer of membership and their associated assets and liabilities into and out of a fund; and
(i) manner in which, any dispute between a fund and any member shall be settled in accordance with the fund’s dispute resolution process.
(3) Subject to the provisions of this Act, the rules shall be binding on—
(a) a fund;
(b) any employer, a member and an officer of a fund; and
(c) any person who puts a claim under the fund rules.
(1) Notwithstanding the provisions of this section, the Regulatory Authority may at any time, direct that fund rules be amended to comply with the provisions of this Act, or for the purposes of protecting the members where necessary.
(2) A principal officer shall, within 30 days of the passing of the resolution approving an amendment or replacement of the fund rules, submit three copies of the amendment or replacement rules to the Regulatory Authority, and any other documentation or information as may be determined by the Regulatory Authority.
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