Frequently Asked Questions (FAQs)

1. What is the purpose of a Pension?

It is to provide income during retirement, when members are no longer in employment nor earning a salary, and may not be physically capable of economically providing for themselves, thereby contributing to a reasonable standard of living.

2. What are the types of pensions available?

There are three main types of pensions in Botswana:

2.1     Occupational Pensions

These are pensions earned as part of employment benefits. The arrangement could be through defined contributions by employers or both the employer and the employee. These are called defined contribution schemes.

The Government also has a defined benefit scheme, which is regulated through the Pensions Act, 2002 (Cap. 27:01), which mainly covers public officers who retired before the year 2001, when Botswana Public Officers Pension Fund (BPOPF) was established and they opted not to move to BPOPF.

2.2    Private/Personal Pensions

These are private pension arrangements made by individuals through private retirement funds and insurance companies.

2.3      State Pensions

These are pensions provided by Government, for example, the Government Old Age Pension ‘Tandabala’ received by every senior citizen aged above 65 years old, regardless of whether or not they used to be employed. 

3. What are the different categories of Pension Fund Members?

The three types of pension membership  are:

3.1      Active Member – is a member who is still actively contributing (saving) towards their retirement, within a pension fund.

3.2      Deferred Member - is a member who no longer contributes to the fund, but who still has their benefits preserved and has not reached retirement age.

3.3      Pensioner Member – is a members who has reached retirement age and/or are receiving their monthly pension income.

4. When did the Retirement Funds Act 2022 Commence?

The Act commenced on October 14, 2022, repealing and replacing the Retirement Funds Act, 2014.

5. What are the main changes in the new Act?

The main changes introduced by the new Act are:

5.1     Expanding and strengthening NBFIRA’s oversight authority;

5.2     Strengthening Pension Fund Administration to protect pension monies;

5.3     Improving the governance of Pension Funds to enhance professionalism;

5.4     Changes in early withdrawals of accrued pension benefits by members, subject to qualifying conditions. 

6. Summary of the Enhanced Withdrawals in Retirement Funds Act 2022

7. What are the enhancements of withdrawal clauses at retirement?

To further facilitate enhanced withdrawals at retirement, the new Act has made the following concessions:

7.1     The commutable amount upon retirement has been increased from one-third (1/3) to 50 percent of accrued savings; and

7.2     The minimum threshold to be encashed in full at retirement has been increased from the current annual pension of P5 000 to an annual pension of P20 000.

8. Should I withdraw the maximum allowed?

The purpose for the enhanced withdrawals is to provide an opportunity to withdraw larger lump sums from the pension benefits, thus facilitating for usage of pension money for meaningful use earlier on in life.

Pensioners should, however, consider whether the receivable pension after making such significant withdrawals will be adequate to sustain them post retirement.

9. Are there any prescribed criteria that are required to be met when requesting enhanced access to benefits?

The Board of Trustees of a Pension Fund is responsible for assessing all requests in line with prescribed criteria that are required to be met in line with the Act. Access to enhanced encashment by qualifying deferred members is subjected to the following conditions:

9.1         That the deferred member demonstrates that he/she has been consecutively unemployed for at least six months.

9.2         That the deferred member demonstrates to the Board of Trustees that, the use of their pension funds is the last resort, that is, there are no any other assets, to settle a mortgage, a loan or medical bills for terminal illness.

9.3         The outstanding loan amount should not exceed the accrued benefit.

9.4         In the event that, a deferred member is a member of more than one fund, only one fund shall make payment for the loan.

10. What about withdrawals for pensioners and active members?

This requires significant in-depth research and valuations to be undertaken, therefore, the new Act does not provide for any withdrawals by active members or pensioners.

NBFIRA is conducting a study that is reviewing the effect and impact of allowing withdrawals, on the pension system. The findings from the study will inform subsequent amendments to the Retirement Fund Act, 2022 where applicable.