The FSCA wants to know how much retirement fund administrators and self-administered funds are charging to process withdrawals from members’ savings components under the two-pot system.
The Authority also wants to know how much it cost administrators and funds to adapt their systems so they could implement the two-pot system from 1 September.
On 13 September, the FSCA issued Information Request 2 of 2024 (RF), which requires all administrators and self-administered funds to submit information about the costs associated with the two-pot system.
The Authority intends to publish a report of its findings after it has obtained the requested information.
The Information Request states that boards of retirement funds have a duty to take all reasonable steps to ensure that they act in the best interests of members at all times pursuant to section 7C(2)(a) of the Pension Funds Act (PFA). Accordingly, boards must ensure that reasonable fees are charged for the purposes of, inter alia, withdrawals under the two-pot system.
The questionnaire consists of three main sections.
The first section asks questions about the estimated cost incurred to implement the two-pot system. These questions relate to, among thing others, the cost of adapting systems to be able to administer the two-pot system, staff training, member communication, and setting up a call centre. Administrators and funds are asked how they plan to recover these (if they will not be absorbed by the business), as well as the period of recoupment.
This section also asks whether the administrator has fidelity insurance to cover the cost of a fraudulent savings component withdrawal, and what measures have been implemented to prevent the payment of a fraudulent withdrawal.
The second section asks questions about increases in administration fees because of the two-pot system (that is, increases above any inflationary increase on the anniversary of the contract). Where the increase will differ across funds, administrators are asked to provide the minimum and maximum fee per member.
The third section is specifically about the fees for savings component withdrawals. The FSCA wants to know whether an additional fee is charged for savings component withdrawals. The questions include whether the administrator has a specific fee for members who withdraw low amounts and whether the administrator will consider reducing its fees once it knows the number of savings component withdrawals.
Administrators are also asked through which channels members can request a savings component withdrawal, and the difference in the fees for processing claims manually and electronically.
The completed questionnaire must be emailed to Ms Corlia Buitendag at twopotfeequestionnaireadministrator@fsca.co.za by 30 September.
Entities that fail to submit the requested information by the deadline will be guilty of an offence under section 37 of the PFA and section 267 of the Financial Sector Regulation Act.
Enquiries about the Information Request should be directed at Buitendag at Cornelia.Buitendag@fsca.co.za
