17 Aug 2022

Finance minister, Ms Peggy Serame has tabled, on a certificate of urgency, the Retirement Funds Bill 2022, which re-enacts the repealed Retirement Funds Act 2003. 

Presenting the bill for the second reading on Monday, Ms Serame said several factors necessitated review of the Retirement Funds Act 2003, which had replaced the Pensions and Provident Funds of 1988. The bill was tabled on a certificate of urgency by finance minister, Ms Peggy Serame on Monday.

Presenting the bill for second reading, Ms Serame said several factors necessitated the review of the Retirement Funds Act 2003 which had replaced the Pensions and Provident Funds of 1988.

She pointed out that the act required review to further align some sections with local experiences, international standards and best practices for protection of the benefits of pension fund members. 

She added that the review was necessary to put in place clauses on anti-money laundering and combating the financing of terrorism.

“As a result of the number of amendments, the act has been repealed and re-enacted through the Retirement Funds Bill 2022. 

The objective of the bill is to repeal and re-enact with amendments, the Retirement Funds Act (Cap 27) 2003. The Retirement Funds Act provides for licensing, regulation and administration of all retirement funds, including pension and provident funds, funds administrators and for matters incidental to or connected therewith,” said the minister.

Ms Serame explained that part one of the bill provided for the licensing of funds while part three provided for the governance of funds and matters relating to funds administrators. 

She added that part four laid out financial requirements of funds and provisions on the holding of assets and investments. She said the billing part five provided for statutory management, termination and winding up of funds. She further said the bill laid out penalties for contravention of the act.

“The proposed amendments also include to strengthen and widen the oversight authority of the Non-Bank Financial Institutions Regulatory Authority (NBFIRA),  improve and insure balanced and cost effective corporate governance of funds, revise the provisions on encashment of residual funds and combat money laundering and financing of terrorism,” said the minister.

Ms Serame added that the bill was also aimed at introducing adherence to best practices. She said the bill provided for an increase in encashment of residual funds in instances where a deferred member had defaulted on any loan other than a mortgage. 

She also said the money accessible for members to pay for the loan would be increased from the current one third to 100 per cent of the pension provided the pension would cover the whole amount of the loan.

She added that the bill allowed for deferred members to access pension to repay defaulted mortgage loans for principal homes and pay for medical expenses in case of terminal ailments.

“These enhanced benefits are for deferred members only and as for other categories such as active members and pensioners, it is important to make changes from an informed position as management of pension funds is complex and requires actuarial valuations into a distant future which is uncertain. For this reason, my ministry through NBFIRA is conducting a study to review the effects and impact of allowing encashment concessions for active members and pensioners on the pension system in Botswana,” said the minister.

She said the results of the study would come out in November.

Supporting the bill, Selebi Phikwe West MP, Mr Dithapelo Keorapetse asked for an increase in the amount of contributions to pensions of civil servants by government so that they could retire with bigger packages. 

He also asked for significant portions of pensions to be invested locally instead of abroad. He also asked for protection of pensioners against predatory lenders.

Ngami MP, Mr Caterpillar Hikuama said passing the bill would lead to workers benefitting from their pensions while still productive. Takatokwane MP, Mr Friction Leuwe welcomed the provision to allow members to make encashment from their retirement fund and pay for property loans. Ends