NBFIRA Chief Executive Officer’s DumaFM Interview on the Retirement Funds Bill 2022
Today, Mr. Oduetse A. Motshidisi, Chief Executive Officer of the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) conducted an interview on DumaFM, where he provided clarity on aspects of the proposed amendments that have drawn the most public attention to date.
The Retirement Funds Bill was presented to Parliament on a certificate of urgency by the Minister of Finance and legislators’ deliberations on the proposed amendments and is currently ongoing.
Mr. Motshidisi reinforced that the sole purpose of a pension is to provide income to members of pension funds during retirement for their subsistence and as a means to augment their living costs, and this is the context within which the current amendments must be viewed.
He added that the amendments to the Bill have been necessitated by several factors which include Government’s desire to assist members in light of the financial strain caused by the prevailing high cost of living and the impact of the Covid-19 pandemic on individual members’ financial security; the need for greater alignment to international standards pertaining the retirement funds industry; to ensure greater relevance of the regulatory framework to today’s landscape and prevailing challenges.
It is in light of the aforementioned reasons, that Clause 52 of the Bill proposes to assist deferred pension members by increasing the amount they may encash as a lump sum, from one-third to fifty percent of their pension benefits to pay towards loans they have defaulted on including mortgage loans owed, and due to unemployment. Additionally, deferred members may also access funds to settle medical bills in the event that they have a terminal illness.
Deferred members are those members who no longer contribute to the pension fund (either due to retirement or resignation but have not yet reached retirement age), but who still have their benefits preserved and have preserved pension rights with the pension fund.
Mr. Motshidisi elaborated that it is standard international practice that pension funds have some restrictions on the degree to which active fund members may withdraw funds, as they are deemed still capable of productive employment and to also preserve the viability of the fund, which is primarily designed to benefit member when they reach retirement age.
In closing, Mr. Motshidisi buttressed the importance of market players in the retirement funds industry complying to anti-money laundering obligations and laws as outlined in the Financial Intelligence Act, as essential to protecting pension fund members as well as preserving the integrity of the industry.
Link to the audio interview: https://www.nbfira.org.bw/sites/default/files/NBIFIRA INTERVIEW 17.08.2022.mp3
