Index of issues of The Employee Benefits Monitor

Strategy and policy development and implementation based on sound and informed identification and analysis of legal, case law and public policy developments.

Based on 25 years’ local and international experience and expertise.

Not for mugus.

We are developing an index of back-issues of The Employee Benefits Monitor and our Review Papers, going back to 1999. The index below is still being finalised.

Subscribers may e-mail ebmonitorcoza@gmail.com for those issues of The Employee Benefits Monitor which they would like to read.

Non-subscribers who wish to purchase one or more of these issues may e-mail us with their details.

E B Monitor No. 292 [4 June 2010]:

Editorial and contents

In our issue No. 287 of 19 February 2010 we included extracts from National Treasury’s Budget Review pertaining to social security reform/socialization of private savings. Issue 288 of 10 March 2010 also included the following articles relating to social security.

§ Extract from Statement by the Honourable Ministers of Social Development and Public Works, Ms Edna Molewa and Mr Geoff Doidge on the occasion of Social Protection and Community Development Cluster media briefing, Cape Town, Parliament 23 February 2010

§ Government continuing with plan to divert 5% of retirement funds’ investments - Ebrahim Patel, Minister of Economic Development, released his department’s first strategic plan (2010/11 – 2012/13) last week. It sets out the work areas that the Department will focus on in the next three years, and the actions that will be taken in 2010.

In this issue No. 292 we provide a few other bits and bobs news about social security arising this year. There is little new so we suggest you just skim through this issue electronically rather than printing … or just delete this issue. We also include a press release from Alexander Forbes on fidelity cover.

A meatier issue of The E B Monitor is on its way on Monday.

In this issue:

1. Address by the Minister of Social Development, Mrs Edna Molewa at the 2010 Winter Conference of the Principal Officers’ Association, Johannesburg Page 2

2. Budget Vote speech by the Minister of Social Development, Mrs Edna Molewa, to the National Assembly, Cape Town Page 5

3. Extract from Minister of Finance Pravin Gordhan’s keynote address to International Congress of Actuaries Page 12

4. Extract from address by the Deputy Minister of Finance: Nhlanhla Nene on the impact of the budget on the transformation of the economy Page 12

5. Extract from Address at the launch of the Government Employees Pension Fund (GEPF) Policy Statement on Responsible Investment. Delivered by Lesetja Kganyago on behalf of: Pravin Gordhan Minister of Finance Page 13

6. Extract from Budget Vote Speech - Vote 9: National Treasury - Pravin Gordhan:

Minister of Finance Page 13

7. Compulsory pension fund investments: Reply by Minister of Finance, Pravin Gordhan, on questions posed in the National Assembly for written reply Page 15

8. Increasing losses see retirement funds resort to fidelity and trustee indemnity covers Page 15

Employee Benefits Monitor No. 291 – 17 May 2010

Contents

1. Draft Taxation Laws Amendment Bills 2010:

1.1 National Treasury media statement 10 May 2010 - Page 2

1.2 Extracts from Explanatory Memorandum on The Taxation Laws Amendment Bill, 2010 (Submitted to The Standing Committee On Finance 10 May 2010) - Page 5

· “2.2. Merging lump sum termination employment payments into the pensions withdrawal tax table - Page 5

· 2.3. Key employee insurance schemes - Page 6

· “2.5 Post retirement commutation (conversion) of annuities into lump sums - Page 8

· “2.6 Partial wind-up of umbrella funds - Page 9

· “2.7 Retirement fund pay-outs to non-members - Page 10

· “2.8. Tax-free fringe benefits for employer-provided professional fees and indemnity insurance - Page 11

1.3 Extension of deadline for preservation funds - Page 12

2. National Treasury’s Ongoing Investigation - Offshore Captives and Protected Cell Companies - Page 13

3. SARS’ notifications - Page 13

4. Financial Advisory and Intermediary Services Act, 2002 (“FAIS ACT”) FAIS Circular 03/2010 5 May 2010 - Page 15

5. Omission in Labour Relations Act puts employers at risk of defrauding disabled employees of benefits - Page 17

6. Kidnap and ransom on the rise in South Africa - Page 19

7. Cabinet approves Reserve Bank Amendment Bill - Page 20

8. Law students welcome Cabinet decision - Page 21

9. Poor to get free legal services - Page 23

Issue No. 289/ 25 March 2010 of The Employee Benefits Monitor

Payment of death benefits in respect of minors

This is a Review Paper in which we identify, summarise, review and comment on approximately 40 often contradictory court judgments and determinations of the Pension Funds Adjudicator. The focus is on the development of subsection 37C(2)(3) of the Pension Funds Act, 1956 from its introduction and how incorrect determinations of the subsection by the Adjudicator and lack of understanding of the law by the FSB, National Treasury and Institute of Retirement Funds have impacted on the drafting and understanding of the 2008 amendments.

This is a lengthy document.

Text before 2008 amendments:

“(2) For the purpose of this section, a payment by a registered fund to a trustee contemplated in the Trust Property Control Act, 1998, (Act No 57 of 1988), for the benefit of a dependant or nominee contemplated in this section shall be deemed to be a payment to such dependant or nominee. “

Text after 2008 amendments:

“2)

(a) For the purposes of this section, a payment by a registered fund for the benefit of a dependant or nominee contemplated in this section shall be deemed to be a payment to such dependant or nominee, if payment is made to-

(i) a trustee contemplated in the Trust Property Control Act, 1988, nominated by-

(aa) the member;

(bb) a major dependant or nominee, subject to subparagraph (cc); or

(cc) a person recognised in law or appointed by a Court as the person responsible for managing the affairs or meeting the daily care needs of a minor dependant or nominee, or a major dependant or nominee not able to manage his or her affairs or meet his or her daily care needs;

(ii) a person recognised in law or appointed by a Court as the person responsible for managing the affairs or meeting the daily care needs of a dependant or nominee; or

(iii) a beneficiary fund.

(b) No payments may be made in terms of this section on or after 1 January 2009 to a beneficiary fund which is not registered under this Act.”

Issue No. 288/10 March 2010 of The Employee Benefits Monitor

1. News from the FSB

1.1 31 March 2010 deadline for maximum 20% foreign investment limit extended to 31 March 2012

1.2 FSB documents for comments

2. Tax news

2.1 Pension and provident funds – applications for tax directives

2.2 About tax directives: SARS’ explanation

2.3 Revised tax deduction tables in respect of employees

2.4 SARS reminds taxpayers with car allowance to record their odometer readings

3. Bits and bobs

3.1 Comprehensive social security

Extract from Statement by the Honourable Ministers of Social Development and Public Works, Ms Edna Molewa and Mr Geoff Doidge on the occasion of Social Protection and Community Development Cluster media briefing, Cape Town, Parliament 23 February 2010

3.2 Government continuing with plan to divert 5% of retirement funds’ investments

Ebrahim Patel, Minister of Economic Development, released his department’s first strategic plan (2010/11 – 2012/13) last week. It sets out the work areas that the Department will focus on in the next three years, and the actions that will be taken in 2010.

3.3 Proposed introduction of definition of disability into Social Assistance Act, 2004

3.4 Department to enforce 2% disability target

3.5 SA banks boast healthy risk ratios relative to most others - Media release issued by The South African Institute of Chartered Accountants (SAICA), Johannesburg, Thursday, 4 March 2010

3.6 New Companies Act’s “damaging” provision - SAICA media release Johannesburg, Monday, 1 March 2010 – One of the most damaging provisions in the new Companies Act is the removal of the requirement for non-public companies to be audited.

3.7 Ignoring local insurance regulations could scupper global expansion - Press release from Alexander Forbes Risk Services 9 March 2010

4. Case summary

4.1 Pension Funds Adjudicator has no jurisdiction over umbrella trusts …. and ignores her office’s precedents over minors’ benefits being paid into trust - Kofa v Chemical Industries National Provident Fund and NBC

Issue No. 287/20 February 2010 of The Employee Benefits Monitor

Contents

1. Retirement fund and FSB news (Page 2)

1.1 Draft replacement Regulation 28 to the Pension Funds Act, 1956

1.2 FAIS referral to Enforcement Committee

1.3 Cancellation of approval of administrators

1.4 Cancellation of registration of pension funds and participating employers

2. Social security reform – some news from Budget 2010 (Page 9)

2.1 The view of the Department of Social Development (DSD): Extracts from Vote 18 Social Development (pages 355 to 374), in the Estimates of National Expenditure

2.2 The view of National Treasury: Extracts from Vote 9: National Treasury, in Estimates of National Expenditure

2.3 “Saving and income security for low-income earners” Extracts from the Budget Review’s Chapter 7: Social security and health care financing

2.4 “Access to health care” and “ National health insurance”: Extracts from the Budget Review’s Chapter 7: Social security and health care financing

3. Budget 2010 – A selection of less high profile news (Page 17)

3.1 From Chapter 5 of the Budget Review – Revenue trends and tax proposals Medical scheme contributions and medical expenses; Retrenchment package merger; Company car fringe benefits; Employee deferred compensation and insurance schemes; Taxes upon death

3.2 Annexure C of The 2010 Budget Review: Miscellaneous tax amendments Post-retirement conversion of annuities into lump sums; Multiple successions of retirement savings; Partial wind-up of umbrella funds; Retirement savings payouts to third parties; Employer payment of professional fees on behalf of employees; Refinement of key employee restricted share schemes

Subscription and cancellation fees outstanding: GEPF, SA Quantum, Henry Dul

Issue No. 284/29 December 2009 of The Employee Benefits Monitor

1. SARS news – tax directives Page 2

2. FSB news Page 2

2.1 FSB replaces board of management of security guards’ provident fund

2.2 Clarification in respect of the approval of foreign-based entities providing investment administration services or giving advice to South African pension funds

2.3 FSB fines 2 collective investment schemes

3. FAIS Page 5

3.1 FAIS Act set to improve consumer protection and professionalism in financial services industry

3.2 Update on Licenses for Financial Services Providers

4. Bits and bobs Page 8

4.1 Special leave granted to the Chief Executive Officer of the South African Social Security Agency

5. E B Monitor’s case summaries of determinations of the Pension Funds Adjudicator Page 9

5.1 From 13 September 2007 Adjudicator has no discretion to investigate complaints older than three years - No. 1

5.2 From 13 September 2007 Adjudicator has no discretion to investigate complaints older than three years - No. 2

5.3 From 13 September 2007 Adjudicator still has discretion to investigate complaints older than three years, if the complaint was lodged before 13 September 2007

5.4 Bald allegations won’t get you very far

5.5 The rules are binding … if you believe the Adjudicator … this time

6. International snippets Page 15

6.1 Extract from e-mail notification of EBRI (Employee Benefits Research Institute) providing summaries of EBRI’s November 2009 publications

6.2 International investment collapses in 2009, says OECD - OECD – Paris, 8 December 2009

7. Recent issues of The Employee Benefits Monitor Page 17

Issue No. 283/30 November 2009 of The Employee Benefits Monitor

1. Social security Page 2

1.1 Extract from a statement by the Minister of Public Works Geoff Doidge, on the occasion of Social Protection and Community Development Cluster media briefing, Cape Town, Parliament 9 November 2009

1.2 Social security reform update: Extract from Government’s updated Programme of Action 13 November 2009: Social Protection and Community Development Cluster

2. FSB matters Page 4

2.1 Report by the Directorate of Market Abuse - FSB Media Release: 24 November 2009

2.2 Briefings to National Assembly’s standing committee of finance on 17 November 2009: Public Investment Corporation (PIC), Financial Services Board (FSB) and the Financial Intelligence Centre (FIC) on their 2008/09 Annual Reports

2.3 Audit reports for small funds: Board Notice 152 [20 November 2009]

3. Bits and bobs Page 16

3.1 Window period granted to transfer primary residence from company or trust to a natural person 24 November 2009 Media release issued by SAICA

3.2 COSATU and Financial Sector Campaign Coalition not surprised by BASA’s move - Joint press statement by COSATU and Financial Sector Campaign Coalition - Jan Mahlangu, COSATU Retirement Funds Policy Co-ordinator, 26 November 2009

4. Judgments, determinations and rulings Page 18

4.1 Material facts must be established before three years prescription for retirement fund claims commences – Supreme Court of Appeal judgment [Snapshot summary, media summary and text of judgement]

4.2 Ombudsman for Long-term Insurance’s case studies - From Issue Number 12 [25 November 2009] of the Ombudsman’s newsletter OMBUZZ

4.3 Supreme Court of Appeal agrees with High Court’s rejection of Adjudicator’s determination Mungal v Old Mutual (56/09) [2009] ZASCA 141 (20 November 2009)

5. Recent issues of The Employee Benefits Monitor Page 27

This is a list of the contents of recent issues. Please e-mail ebmonitorcoza@gmail.com for back-copies.

Issue No. 282/10 November 2009 of The Employee Benefits Monitor

1. Divorce: Taxation of retirement fund benefits – Treasury’s mess continues

Overview

We noted in issue 273 of The E B Monitor [28 August 2009] that Treasury had advised the parliamentary standing committee of finance (formerly known as the committee of finance) that Treasury agreed that lump sums will no longer be included in respect of post-1 March 2009 withdrawals associated with pre-13 September 2007 divorce orders. This non-inclusion would apply for both the member and the spouse so the accumulation principle will no longer be relevant. The then draft Taxation Laws Amendments Bill, 2009 would be amended accordingly.

However, the Bill, promulgated on 30 September 2009 instead allocated the tax liability to the non-member spouse.

SARS has written to the Institute of Retirement Funds outlining procedures to be implemented until corrective legislative amendments are enacted.

We provide herein an extract from issue273 of the E B Monitor, followed by SARS’ letter.

1.1 Treasury’s compromise: From issue No. 273 of The E B Monitor [28 August 2009]

1.2 SARS’ letter of 4 November 2009 to Institute of Retirement Funds - Operational implications

2. Social security news

Highlights of these articles

§ The task team appointed to look into the issue of comprehensive social security has completed a draft on social security and retirement reform. The Consolidated Government Position Paper will be released for public consultations pending Cabinet approval.

§ SASSA report: Grants being awarded to dead people, to companies and to dormant bank accounts – Democratic Alliance

§ Minister of Health appoints Ministerial Advisory Committee on the National Health Insurance. The committee will consider comments on the drfat White Paper advise the Ministry on what to include in the final NHI implementation plan. Consumers, retirement funds and insurers are not represented on the committee.

§ Cosatu and HASA welcome the committee

2.1 SA’s social security on the right track – Doidge 9 November 2009 BuaNews

2.2 SASSA report: Grants being awarded to dead people, to companies and to dormant bank accounts - Statement by Patricia Kopane MP – DA Shadow Minister of Social Development8 November 2009

2.3 Statement on the appointment of a Ministerial Advisory Committee on the National Health Insurance - Issued by the Ministry of Health 5 November 2009

2.4 Announcement of Ministerial Advisory Committee on NHI - Hospital Association of South Africa 9 November 2009

2.5 Implement the National Health Insurance Scheme ! 6 November 2009 Cosatu

2.6 COSATU welcomes NHI Advisory Committee 10 November 2009 Cosatu

3. Determinations, rulings and judgments

3.1 FAIS Ombud orders brokers who place client in shady forex investments despite warnings by regulators to pay

3.2 Determination against PPS Issued by The Office of the Ombudsman for Long-Term Insurance

Issue No. 281/28 October 2009 of The Employee Benefits Monitor

Contents

1. Social security [Page 2]

1.1 Extension of child support grant:

1.1.1 Extract from Statement on the Cabinet meeting held on 21 October 2009

1.1.2 Child support grant extended to 16-years-old 22/10/2009 BuaNews

1.1.3 Extracts from transcript: Post-Cabinet briefing by Government Spokesperson, Themba Maseko, Imbizo Media Centre, Cape Town 22 October 2009

1.2 Workers Compensation fund: R 1.7 billion for zero service Ian Ollis, MP: DA Shadow Deputy Minister of Labour 21 October 2009

1.3 National Health Insurance: Extracts from transcript: Post-Cabinet briefing

2. MTBPS [Page 7]

2.1 Extracts from Speech by Minister of Finance, Mr Pravin Gordhan during the Mid Term Budget Policy for 2009 27 October 2009

2.2 Extract: Peoples Budget Coalition Statement on the Medium Term Budget Policy Statement, 27 October 2009

2.3 NEHAWU statement on the medium term budget policy statement

2.4 MTBPS has shut the door on the left - Dr Dion George, MP: DA shadow minister of finance 28 October 2009

2.5 Gordhan's hidden budget agenda - by Albert van Zyl, International Budget Partnership (www.internationalbudget.org)

2.6 Press statement by prince Mangosuthu Buthelezi MP President of The Inkatha Freedom Party on The Medium Term Budget Policy Statement

2.7 SACP statement on the Medium Term Budget Policy Statement

3. Bits and bobs [Page 16]

3.1 Governance failures and the financial services crisis - SAICA Johannesburg, Wednesday, 21 October 2009

3.2 Update on Licenses for Financial Services Providers - FSB Media Release Wednesday, 21 October 2009

3.3 FSB’s Enforcement Committee fines insider R150 000 – FSB statement 21 October 2009

3.4 Ovation curators vindicated by court ruling - Media release from Webber Wentzel 19 October 2009

3.5 Appointment by President Zuma of members of the Independent Commission on the Remuneration of Public Office bearers

Issue No. 280/26 October 2009 of The Employee Benefits Monitor

Ever heard of someone accusing a Trevor Manuel institution or person of being humble, competent and relevant?

Contents

1. FAIS Ombud’s Annual Report 2008/2009

The commencement of his position as FAIS Ombud was marked by a lavish, over the top and expensive party with ludicrous and inappropriate frills such as a Scottish band. So it is perhaps unsurprising that the FAIS Ombud has considered himself worthy of at least four pictures of himself in his annual report. Perhaps equally unsurprising is that the FAIS Ombud has provided numerous, unsolicited personal opinions on a range of issues.

1.1 More transformation required in financial services, Says Fais Ombud - Fais Ombud’s statement

1.2 Speech: Office of the FAIS Ombud - 23 October 2009

1.3 FAIS Ombud returns R32,9-m to aggrieved consumers - FAIS Ombud’s statement Pretoria – Friday, 23 October 2009

1.4 Extract from the FAIS Ombud’s Annual Report 2008/2009 - The Epilogue - Reflections – after six years as South Africa’s first Ombud for Financial Services Providers.

2. Recent determinations of the FAIS Ombud [Statements issued by the FAIS Ombud plus a few from the latest annual report]

2.1 Ombud finds broker chased commission by extending maturity date - Pretoria – Monday 12 October 2009

2.2 Ombud orders Leaderguard broker to repay pensioners - Pretoria – Friday 16 October 2009

2.3 Determination [Page 23 of the 2008/2009 annual report] - Nonhlanhla C. Kawula vs African Life Assurance Company Ltd t/a Sanlam Sky Solutions & Others

2.4 Settlements during 2008/09

2.4.1 Failure to act with due skill, care and diligence. Inappropriate advice given on pension withdrawal benefits. [Page 35 of the 2009/2009 annual report]

2.4.2 Failure to disclose all the material terms needed to ensure the complainant was able to make informed decision. [Page 38 of the 2008/2009 annual report]

3. FSB: curators bleeding pension funds of R 126 million

Statement by Dr Dion George, MP: DA Shadow Minister of Finance 25 October 2009

Issue No. 279/20 October 2009 of The Employee Benefits Monitor

Green Paper: National Strategic Planning

The Presidency released it’s Green Paper: National Strategic Planning this month. It touches on and for some probably creates more confusion than clarity about the way forward for South Africa’s social security reform. In this issue of The Employee Benefits Monitor we provide a few extracts from the Green Paper, plus reactions thereto.

At the time of writing the following parliamentary hearings were planned:

Thursday, 22 October 2009

Ad Hoc Committee on the Green Paper on National Strategic Planning (National Assembly), [Deliberations on Green Paper], Committee Room E249, Second Floor, National Assembly Wing, 10:00

Tuesday, 27 October 2009

Ad Hoc Committee on the Green Paper on National Strategic Planning (National Assembly), [Deliberations on the report on the Green Paper], Committee Room E249, Second Floor, National Assembly Wing, 15:00

Wednesday, 28 October 2009

Ad Hoc Committee on the Green Paper on National Strategic Planning (National Assembly), [Finalisation and adoption of the report on the Green Paper], Committee Room E305, Third Floor, National Assembly Wing, 14:00

Contents

1. Extracts from the green paper

1.1 Extract 1: Preface

1.2 Extract 2: The need for strategic planning

1.3 Extract 3: What type of planning is envisaged? (Including, as an example, social security reform)

2. A few commentaries on the Green Paper

2.1 NEHAWU statement on the tabling of the green paper on national strategic planning

2.2 Planning Commission must not overshadow Nedlac - BuaNews

2.3 COSATU response to green paper on national strategic planning 16 October 2009

2.4 SACP statement on the closing date for comments on the green paper

Regards

Mike Thurtell

ebmonitorcoza@gmail.com

Issue No. 278/16 October 2009 of The Employee Benefits Monitor

Pension Funds Adjudicator breaks the law again … and again

In this issue we focus on the Pension Funds Adjudicator who has again exceeded the authority granted to her in terms of the Pension Funds Act, 1956.

The first example is her decision to broaden the scope of her authority beyond that contained in the Act, to go beyond case-by-case complaints (as defined in the Act), to not handling complaints but developing and issuing scorecards on funds. Resources meant for complainst-handling as required in terms of the Act have also been abused for this project.

The second is the rejection (as reported by NBC) of her Dollman determination involving secret profits.

The articles in this issue are:

NBC terminates contract with Private Security Sector Provident - NBC statement Johannesburg, Friday 16 October 2009 Page 2

NBC questions accuracy of the OPFA scorecard - NBC statement Johannesburg, Tuesday 06 October 2009 Page 2

Adjudicator explains and apologises - Undated statement issued by the Pension Funds Adjudicator “A NOTE ON THE OPFA SCORECARD RESULTS” Page 4

Closure of Adjudicator’s Cape Town office - Undated statement issued by the Pension Funds Adjudicator Page 5

Secret profits (Page 6)

§ Media statement issued by the Pension Funds Adjudicator about her Milton and Dollman determinations, and our commentary [Both from November 2008]

§ Extract from NBC’s article entitled “High Court Ruling Sets Industry Precedent

The extent of the powers of the Pension Funds Adjudicator: Dollman v I&J Retirement Fund & Others” [The article appears in NBC’s newsletter Motswedi, available at NBC’s website as a link in its media section. We are attempting to obtain a copy of the judgment]

Issue No. 277/2 October 2009 of The Employee Benefits Monitor

In this issue we focus on case summaries of determinations of the Pension Funds Adjudicator.

Issue No. 276/2 October 2009 of The Employee Benefits Monitor

Contents:

1. The Directorate of Market Abuse

1.1 FSB media release: 22 September 2009: Mr Hittler

1.2 FSB media release: 22 September 2009: Moribo Leisure Limited

2. Social security: Extracts from Government's Programme of Action 2009

Social Protection and Community Development Cluster
Human Development Cluster

3. Pension Fund Adjudicator apportioning blame to wrongful parties - Sam Tsiane Numsa Benefits Co-ordinator, 2 October 2009

4. The kind of incorrect ruling that can bankrupt retirement funds: Unpaid contributions and liability for payment of benefits: Adjudicator gets it wrong … again Nkosi v Private Security Sector Provident Fund and Jikelele Security

5. The rules are king, but only sometimes; and with less frequency: The Tek judgment and what the Supreme Court of Appeal really said

6. Address by the Minister of Higher Education and Training, Dr Blade Nzimande at dinner in honour of the success of the South African Actuaries Development Programme, Morningside, Sandton

29 September 2009

7. Minister Gordhan inaugurates new Government Employees Pension Fund (GEPF) Board of Trustees.

The articles reflect opinions are are not the final word on any issue. We hope that we contribute to greater knowledge. We also trust that care is taken before embarking on nay course of action.

Issue No. 275/15 September 2009 of The Employee Benefits Monitor

In this issue we focus on case summaries of determinations of the Pension Funds Adjudicator.

Issue No. 272/ 6 August 2009 of The Employee Benefits Monitor

Issue 272 (6 August 2009) included extracts from Standing Committee on Finance: Report-Back Hearings (5 August 2009) Taxation Laws Amendments Bills, 2009: Preliminary Response Document

National Treasury has now issued it’s Final Response Document. We have compared the preliminary and final documents and indicated [deletions/omissions in square brackets] and underlined additions. (not to confused by Treasury’s responses to comments, underlined such as “comment misplaced” or “comment accepted”

Please note that this comparison extends only to the extracts provided in Issue 272. We are happy to e-mail the complete Final Response Document on request. It is over 40 pages in length.

We have retained our editorial comments which were previously provided.

The explanatory memorandum is to be published with the Bills on 1 September 2009.

Standing Committee on Finance: Report-Back Hearings (5 August 2009) Taxation Laws Amendments Bills, 2009: Preliminary Response Document [Page 1]

Presentation at Institute of Retirement Funds Conference on Social Security and Retirement Reform: By Selwyn Jehoma, deputy director-general, Department of Social Development [Mr Jehoma will be writing an update article for a future issue of The Employee Benefits Monitor] [Page 7]

NUMSA’s Social Security National Conference: National Union of Metalworkers of South Africa’s statement 4 August 2009 [Page 11]

FSB warns about Platinum Investments: FSB media statement [Page 12]

Issue No. 271/ 7 July 2009 of The Employee Benefits Monitor

Contents

1. Summary/overview of articles in this issue of the E B Monitor [Page 2]

2. Parliamentary business [Page 5]

o 2.1 Report-back: Draft Taxation Laws Amendment Bill, 2009

o 2.2 Social security reform

§ 2.2.1 Treasury and SARS: Joint Report of the Standing Committee on Finance and the Portfolio Committee on Economic Development

§ 2.2.2 Stats SA: Report of the Standing Committee on Finance

§ 2.2.3 Budget Vote speech by the Minister of Social Development,

§ 2.2.4 Report of the Portfolio Committee on Social Development

3. Parliamentary questions by Dr D T George (DA) to the Minister of Finance [Page 11]

4. More irregularities at the South African Social Security Agency (SASSA) [Page 12]

o 4.1 Media statement on the special leave of SASSA CEO

o 4.2 (SASSA) Fezile Makiwane on special leave By Gabi Khumalo of BuaNews

o 4.3 Statement by P Kopane MP: DA Shadow Minister of Social Development

5. FSB matters [Page 14]

o 5.1 The latest Enforcement Committee meeting

o 5.2 Update on Licenses for Financial Services Providers

o 5.3 Proposed cancellation of the approval to act as an administrator

o 5.4 Proposed cancellation of registration of liquidated funds

o 5.5 Proposed cancellation of other funds/participating employers

o 5.6 Documents for comment

6. Ombudsman for Long-term Insurance [Page 21]

o 6.1 Funeral cover: Two case summaries

o 6.2 Two final determinations

§ 6.2.1 Case 1: Income Disability claim

§ 6.2.2 Case 2: Non disclosure

7. Investment Regulations and Defined Contribution Pensions: OECD working paper on insurance and private pensions No. 37 [July 2009] [Page 30]

Issue No. 270/ 30 June 2009 of The Employee Benefits Monitor

In the latest issue [No. 270 (30 June 2009)] of The Employee Benefits Monitor

Warning before printing! Kindly note that most of this issue focuses on submissions made to the parliamentary committee of finance regarding the draft Taxation Laws Amendment Bills, 2009. Other than a submission from Momentum, no retirement fund service provider or organisation or retirement fund made any submission. This issue of the E B Monitor may have limited interest. Treasury will respond to these submissions on 8 July 2009 to the parliamentary committee.

Some readers will have an interest in other topics (e.g. estate duty, provisional tax) and we are happy to e-mail complete submissions to you (in those cases where we have them in electronic form). Please e-mail connection@icon.co.za

FSB news [Page 2]

• Levies on financial institutions (BN74)

• Voluntary dissolution or partial dissolution of a fund (BN75)

• FSB process nearly 19 000 financial services providers

Draft Taxation Laws Amendment Bills: Submissions to parliamentary standing committee of finance [Page 5]

• Background Page 5

• List of who made submissions (oral or/and written) Page 5

• Extracts from submissions (employee benefits-specific) Page 6

° Deloitte (retirement lump sums) Page 6

° Eskom (medical scheme contributions) Page 8

° Large Employers’ Forum (retirement lump sums; medical scheme contributions; inter-fund transfers; s37C death benefits; living annuities) Page 8

° J Dippenaar (lump sums/divorce) Page 11

° Momentum (retirement lump sums; beneficiary funds; employers’ contributions to retirement annuity funds; divorce; post retirement medical liabilities) Page 13

° Old Mutual (post retirement medical liabilities) Page 15

° PricewaterhouseCooper (post retirement medical liabilities) Page 16

° S A Institute of Chartered Accountants (medical scheme contributions; retirement lump sums; calculation of service; second schedule formula) Page 18

° South African Institute of Professional Accountants (retirement lump sums)

° South African Institute of Tax Practitioners (second schedule formula) Page 21

° Werksmans (post retirement medical liabilities) Page 21

Issue No. 269/ 21 June 2009 of The Employee Benefits Monitor

Warning: Before printing this newsletter we suggest that you take a quick look through it, because only parts will be of interest. More specifically, if you have read the explanatory memoranda to the draft tax bills, then you don’t have to look at 1.2 to 1.2.8 other than to note the change in one of the tax rates in the tables in 1.2.3 (see page 5’s second table) which differs from that in the memorandum. We will attend the parliamentary committees’ public hearings on Wednesday and provide feedback.

In issue No. 269 of The Employee Benefits Monitor [22 June 2009]:

1. Parliamentary matters

1.1 Draft Taxation Laws Amendment Bills: Public consultations halved (Page 2)

1.2 Draft Taxation Laws Amendment Bills 2009 – National Treasury’s briefing to standing committee of finance (Page 2)

1.2.1 Background (Page 2)

1.2.2 Medical scheme contributions (Page 3)

1.2.3 Pre-retirement and retirement lump sum benefits (Page 4)

1.2.4 Beneficiary funds (Page 7)

1.2.5 Pension surplus (Page 9)

1.2.6 Post retirement medical aid (Page 10)

1.2.7 Remedial recognition of pre-1998 benefits for public servants (Page 11)

1.2.8 Deductibility of employer contributions to retirement annuity funds (Page 12)

1.3 Parliamentary questions (Page 13)

1.4 Portfolio Committee on Health: Strategic plan for DOH (Page 13)

2. National Health Insurance (NHI) (Page 18)

3. Cosatu interferes with trustees’ duties (Page 19)

4. SAPS Pensions: 2 000 retired officers denied pensions (Page 20)

Other news …

· Apologies for not distributing the paper on misrepresentation … we’re getting there in reconstructing/rewriting this document

· We have made a start on our little Woordeboek and have created a page at www.ebmonitor.co.za

· Research for our history/timeline of retirement and other benefit arrangements has commenced and is available at our homepage. It’s a long way from finished and is being updated almost daily.

Issue No. 268/ 3 June 2009 of The Employee Benefits Monitor

Warning: Before printing this newsletter we suggest that you take a quick look through it, because only parts will be of interest.

In this week’s issue of The Employee Benefits Monitor:

Change to fringe benefits interest rate – Page 2
Table of interest rates in respect of the various Acts administered BY SARS – Page 2
Too scared to ask – Page 3
Hearings on the draft Taxation Laws Amendment Bill and the draft Taxation Laws Second Amendment Bill, 2009: Letter on behalf of The Chairperson of the Standing Committee on Finance – Page 3
Taxation Laws Amendment Bills: [National Treasury press release 1 June 2009] – Page 4
Membership of the National Assembly’s committees of Finance and Health – Page 7
Parliament’s Announcements, Tablings and Committee (“ATC”) Reports: Chairpersons and members of the committees – Page 8
Extract from “STATE OF THE NATION ADDRESS BY HIS EXCELLENCY J G ZUMA, PRESIDENT OF THE REPUBLIC OF SOUTH AFRICA, JOINT SITTING OF PARLIAMENT, CAPE TOWN, 03 JUNE 2009” – Page 16
Deductions off social grants – Page 17

Issue No. 266/ 21 April 2009 of The Employee Benefits Monitor

In this week’s issue of The Employee Benefits Monitor:

1. Liquidation of Glenrand MIB Benefit Services - FSB’s letter of 20 April 2009 page 2

2. Merger of Old Mutual and Medscheme approved – Competition Tribunal page 2

3. Unit trusts (securities) to use CPI instead of CPIX - SUSPENSION OF PROVISION OF DEED IN TERMS OF THE COLLECTIVE INVESTMENT SCHEMES CONTROL ACT, 2002 – page 3

4. Update on Licenses for Financial Services Providers - 20 April 2009 FSB media release page 4

5. DA calls for investigation of unions’ detrimental influence on retirement funds - STATEMENT BY DION GEORGE, MP DA DEPUTY SPOKESPERSON ON FINANCE Release, immediate: Monday, 20 April, 2009 page 5

6. Food for thought? Alert to risks in the economic downturn - UK: A statement by the Pensions Regulator 20 April 2009 page 6

7. Current Market Rates - From Reserve Bank’s website www.resbank.co.za on 21 April 2009 page 8

8. Summaries of determinations of the Pension Funds Adjudicator – page 10

8.1 Dodgy … The member had three shades of complaint. He lost two and won one. Did the Adjudicator understand the rule? We think the member should have lost all three complaints. Phiri v The South African Retirement Annuity Fund and Old Mutual

8.2 A death benefit complaint dismissed without too much effort … at an investigation Sebekedi v Municipal Gratuity Fund and Coris Capital

8.3 A disability claim easily dismissed Rocks v Foodworld Group Provident Fund

8.4 Default order issued against fund to pay withdrawal benefit … even though no questions asked of NBC and employer Hletyiwe v Contract Cleaning National Provident Fund

8.5 Non-resident’s fund benefit must be paid locally James v Kaefer Thermal Provident Fund and Kaefer Thermal Contracting Services

8.6 26 years a bit too long to lodge a complaint Kekana v SA Breweries Pension Fund and Old Mutual

8.7 A silly complaint Chesane v Orion Money Purchase Provident Fund

Issue No. 265/ 15 April 2009 of The Employee Benefits Monitor

In this week’s issue of The Employee Benefits Monitor:

1. Case summaries by the Ombudsman for Long-term Insurance (Page 2)

· Annuity –– annual increases dependent on declared bonuses – whether insurer used its discretion properly in declaring bonuses – applicability of Promotion of Access to Information Act, no 2 of 2000 - whether insurer may unilaterally change policy from one portfolio to another.

· Disability – insured running a business in which he contributed 70% labour – on becoming disabled he carried on with the business, but could only do so by employing people to do the manual work – nevertheless totally and permanently disabled – failure to notify insurer of change in occupation during currency of the policy – insurer thereby prejudiced.

· Disability – permanence of condition at issue – when can a policyholder reasonably be expected to undergo surgery.

· Exclusion clause – “any back condition” excluded – complainant sustaining a neck injury – neck injury not excluded.

· Exception - exclusion clause – event arising from pregnancy – interpretation.

· Funeral policy - covering “eligible children” as defined – interpretation – insurer liable, for interest as well.

· Funeral insurance policy – definition of a “common law spouse” – meaning of.

· Jurisdiction – overpayment to the insured of her monthly pension–insurer demanding repayment - complainant lodging a complaint with the office – held: that the office has jurisdiction over the insurer’s claim, a condictio indebiti –portion of the overpaid money ordered to be repaid.

2. Case summaries by the FAIS Ombud (Page 13)

· Fleecing a friend

Durban investment broker Soobramoney Perimal advertised himself as qualified to provide “fit and proper” financial advice – but the FAIS Ombud has found otherwise.

· FAIS Ombud dismisses complaint against Old Mutual
“The FAIS Ombud has dismissed a complaint against Old Mutual Life Assurance Company which he found had not been negligent in rendering a financial; service.

· “Broker must cough up as he cannot show proof of advice”
“Despite claiming he had informed the client that his insured vehicle must be fitted with Vesa-approved security devices, a broker’s inability to provide voice-logging proof of such advice has landed him in trouble with the FAIS Ombud.

Issue No. 264/ 9 April 2009 of The Employee Benefits Monitor

1. Judgments and other related matters

1.1 SABC loses again [SA Broadcasting Corporation v Coop (178/2008) [2009] ZASCA 30 (30 March 2009).] – page 2

1.2 Registrar must register rule amendments that are not inconsistent with the Act and that are not financially unsound – Supreme Court of Appeal National Tertiary Retirement Fund v Registrar Pension Funds (221/08) [2009] ZASCA 41 (31 March 2009) – page 2

1.3 The doctrine of precedent – page 6

1.3.1 Supreme Court of Appeal restates doctrine of precedent: True Motives v Madhi (543/07) [2009] ZASCA 4 (3 March 2009)

1.3.2 National Director of Public Prosecutions and Others v Vermaak (368/06) [2007] ZASCA 150; [2007] SCA 150 (RSA); [2008] 1 All SA 448 (SCA) (28 November 2007)]

1.3.3 Precedent and Adjudicator’s determinations: What the Adjudicator had to say in Barnard v Cape Municipal Gratuity Fund

1.4 OPFA refuses to follow OPFA precedent – changes tack on factual dependency – Hlathi v University of Fort Hare Retirement Fund - page 10

1.5 Divorce orders: Barnard vs Municipal Gratuity Fund – page 13

2. Notices in Government Gazettes

2.1 Definition of employee – page 18

2.2 Long-term Insurance Act – Returns – page 18

2.3 Short-term Insurance Act – Returns – page 19

3. Bits and bobs

3.1 PSAM dismayed at government exploitation of relief of distress grant – page 20

3.2 Herold Gie establishes new stand-alone pension law department – page 20

3.3 Long-term Insurance Ombudsman to publish determinations for the first time – page 21

Issue No. 263/ 30 March 2009 of The Employee Benefits Monitor

Editorial

The liability of retirement funds and providers resulting from their misstatement/misrepresentation

Or in English …: If a fund/provider misrepresents a situation, by an act or omission, can it hide behind the rules or will it have to pay damages (money) to a member, based on what the member would have done but for the misrepresentation?

The Supreme Court of Appeal (“SCA’) has noted the subjection of retirement funds to legislation, the common law and rules in its Tek and Mostert judgments.

It may happen – and does – that a benefit is paid in terms of registered rules but that a fund and/or provider is ordered to pay an additional, unanticipated and unfunded amount. This liability arises in common law and results from a claim in delict for pure economic loss.

The Office of the Pension Funds Adjudicator (“OPFA”) has ruled on several times that the common law principles applicable to claims for pure economic loss arising from negligent conduct also apply to such disputes in the retirement fund context, as well as complaints over maladministration.

In the employee benefits context the act or omission by the fund/provider which gives rise to the claim, is usually a misstatement/misrepresentation. Frequently such disputes have arisen over communication and disclosure e.g. correspondence, quotations, benefit statements, telephone conversations and explanatory notes regarding options.

The potential liability arising from misstatement/misrepresentation cannot be downplayed, especially as public awareness grows of the availability of this legal remedy and how communication by omission has so often been adopted as a tactic for deception. On the other hand, a misstatement/misrepresentation by itself does not by itself give rise to liability.

Two events in March 2009 have attracted fresh attention to claims for pure economic loss. This issue of The Employee Benefits Monitor explores the requirements which must be satisfied for liability to arise, in the light of these events.

The two events have been a SCA judgment and a determination of the Pension Funds Adjudicator:

1. The Supreme Court of Appeal judgment (MCubed) restated the principles which apply to a claim in delict for pure economic loss resulting from alleged misrepresentations. The judgment is clear and helpful regarding the legal principles (ignoring the particular exchange control complexities and disputes in that case). The SCA restated and clarified what the elements* are that must be addressed – each separately - before liability arises. [* negligence, wrongfulness, causation and loss] and various tests or considerations that apply within each element. Another SCA judgment of 27 March 2009 also noted the test for negligence.

2. A determination of the Pension Funds Adjudicator (Lockhat) accompanied by her media statement regurgitated as articles in the print and electronic media, gained wide exposure. Using the assistance of an independent actuary the Adjudicator found Sanlam and the fund liable for an amount not determined in terms of the rules, but an amount determined as if the member would have embarked on a different course of events if the fund and Sanlam had (a) not made a particular statement (an improbable/imprudent illustrative value) and (b) had provided other information. The Adjudicator’s media statement is included in this issue of The E B Monitor and is a reasonable summary of what her approach to the complaint was. That is not to say that we agree with her or her actuary’s s approach or understanding

This Lockhat determination stands in stark contrast to the MCubed judgment. In the Lockhat determination there is no identification of the elements of liability that must be investigated; there is no identification of what must be considered within each element and there is no reference to any relevant judgment or determination regarding these elements. The same comments apply to what the independent actuary appointed by her, had to say.

The determination did not make much sense to us, so we went back to the drawing board, identifying and selecting judgments, determinations of the OPFA and rulings of the Ombudsman for Long-term Insurance, particularly over the last ten years. These case summaries and extracts from judgements are contained in our Review Paper: Misrepresentation and liability of retirement funds. This Review Paper is over 150 pages long and is available free to subscribers – please email ebmonitorcoza@gmail.com

In this issue of The E B Monitor we attempt to identify and condense the principles that flow from case law identified in the Review Paper and apply them to the Lockhat determination. We hope that our thoughts and opinions are easily identifiable so that they are not confused with the principles established by the SCA. In other words, we hope that we have not misrepresented what the SCA requires!

We have tried to limit technical references and discussions, and have skirted round debates that legal professionals have had over matters of delict. We hope professional lawyers will forgive us our trespasses, as we attempt to stick to the basics.

This is not the final word on this issue and should not be used without professional advice before embarking on a course of action. If anything, we hope that this debate highlights that communication is not a soft issue for a separate department, but that communication is something done or not throughout the whole organisation, with potential liabilities.

Mike Thurtell

ebmonitorcoza@gmail.com

Contents

1. Media statement by Pension Funds Adjudicator: Lockhat determination - page 3

2. Introduction and overview – page 4

3. The SCA’s Mcubed judgment: A restatement of requirements for liability – page 6

4. The elements for a successful claim and what Lockhat says – page 6

4.1 An act or omission: The act of representation – page 6

4.2 Negligence – page 7

4.3 Wrongfulness – page 10

4.4 Causation – page 12

5. The loss – page 15

Issue No. 262/ 31 March 2009 of The Employee Benefits Monitor

Contents

In this issue we provide a selection of recent articles. Kindly note that a separate issue will provide case summaries.

1. Government's Programme of Action – Progress update at 6 March 2009 - page 2

2. Tax matters

2.1 Living annuities: Notice 290 Gazette 32005 11 March 2009 – page 3

2.2 Notice in terms of paragraph 2C of the second Schedule of the Income Tax Act – page 5

2.3 General Note GN 16 Addendum C- page 5

3. FSB news

3.1 FSB risk assessment of fund administrators – page 7

3.2 Pension Funds Act, Act 24 of 1956: Penalties in respect of the late submission of financial statements for 2006 financial year-ends in respect of funds with assets more than R6 000 000 but less than R50 000 000 – page 8

3.3 Financial Advisory and Intermediary Services Act, 2002: Notice on requirements for professional indemnity and fidelity insurance cover for providers, 2009 – page 8

4. Social grants

4.1 Increase in respect of social grants – page 10

4.2 Social grants saga continues … - page 10

5. Other news

5.1 NUMSA (National union of Metalworkers) statements

· New hope for metalworkers as R150 million pension surplus is paid out by the motor industry fund – page 17

· Numsa turns heat on 3 000 employers over R28m arrears on workers’ pension and medical aid contributions – page 17

5.2 INVESTEC, FEDUSA and SAEWA agree to settle FEDSURE pension saga – page 18

5.3 Wide gulf between ANC and Government – Cosatu – page 20

5.4 Road Accident Fund disability cap payout threatens employee benefits cover – Alexander Forbes

Issue No. 261/ 20 February 2009 of The Employee Benefits Monitor

Contents:

1. Case summaries

1.1 Statement issued by the Pension Funds Adjudicator, followed by comment by the Employee Benefits Monitor (Wentworth v GG) [Page 2]

1.2 Berman v the Financial Services Board [Page 11]

2. FSB news

2.1 Surplus: Directive No. 3 (Pension Funds Act) [Page 15]

2.2 Change in effective date: Schedule L fees [Page 15]

2.3 Bert Chanetsa – FSB’s New DEO of Investment institutions [Page 15]

2.4 The determination of Fit and Proper requirements: An overview - By Charene Nortier, Manager: Supervision, FAIS Department, FSB [Page 16]

3. International snippets

3.1 Credit crunch slashes workers’ pensions by over a third – Aon [Page 18]

3.2 Despite the crisis, private pensions are needed more than ever before - OECD [Page 20]

4. Recent issues of The Employee Benefits Monitor [Page 21]

Kindly note that opinions that we express are just that – our opinions. They are not the last word on any issue. They often need further consideration, debate and where appropriate, relevant professional input.

If you have any comment or article for publication we are happy to include it in our publication.

Issue No. 260/ 11 February 2009 of The Employee Benefits Monitor

Contents:

· FAIS: The difference between negligence and honest blundering; and lack of integrity

– Ruling by Financial Services Board of Appeal (Page 2)

· GEPF: Pension increase (Page 4)

· E B Monitor: Note about two important gazetted Notices (Page 5)

· Inadequate employee benefit schemes expose employees to risk - Alexander Forbes Risk Services statement 10 February 2009 (Page 5)

· National Budget 11 February 2009 – Extracts from Treasury’s Budget Review (Page 7)

· Media Release: Association For Savings And Investment South Africa (Asisa) 5 February 2009 (Page 12)

· New Research from EBRI: Defined Contribution Retirement Plans Increasingly Seen as Primary Type (Page 15)

If you have any comment or article for publication we are happy to include it in our publication.

Issue No. 259/ 6 February 2009 of The Employee Benefits Monitor

Contents:

Case summaries

1.1 A complaint with no substance (page 2)

1.2 Another complaint with no substance (page 2)

1.3 Divorce decrees: Must funds be identified by name or identifiable? Adjudicator still confused about benefits on divorce (page 3)

1.4 The right of a non-member spouse to information (page 8)

1.5 High Court reject’s Registrar’s and FSB Appeal Board decision on surplus (page 13)

2. Bits and bobs

2.1 SAICA ushers in a new Executive President (page 19)

2.2 International snippets (page 20)

2.2.1 Aon Political Risk Map: Political Stability Next Victim of Credit Crunch – Aon (page 20)

2.2.2 Where—and How Much—Do Employers Spend on Compensation? – Employee Benefits Research Institute (page 22)

2.2.3 Liability-Driven Investing Served Pension Funds Better Than Traditional Allocations in 2008 – Watson Wyatt (page 23)

3. Contents of the previous three issue of The Employee Benefits Monitor (page 24)

4. Extracts from State of the Nation address of the President of South Africa, Kgalema Motlanthe to the joint sitting of Parliament Cape Town, 6 February 2009 (page 26)

5. Statement by curators of Ovation Global Investment Services (Proprietary) Limited ("Ovation Services") and Ovation Global Investment Nominees (Pty) Limited ("Ovation Nominees") (page 28)

If you have any comment or article for publication we are happy to include it in our publication.

Issue No. 258/ 27 January 2009 of The Employee Benefits Monitor

Contents:

1. GEPF: Notice for Election of the Board (page 2)

2. Forthcoming cases of interest Cases enrolled for hearing: The Supreme Court of Appeal

(page 2)

3. Parliamentary affairs: (Page 5)

3.1 Announcements, Tablings and Committee (“ATC”) Reports 22/1/2009

3.2 Status of legislation: Extract from National Assembly Order Paper 27 January 2009

4. FSB issues nearly 19 000 licenses for financial services providers (page 7)

5. Case summaries of Pension Fund Adjudicator determinations: (page 9)

5.1 Employer liable to pay shortfall in withdrawal benefit

5.2 Employers and funds must consider disability benefits where withdrawal due to ill health

5.3 Members have no automatic entitlement to share in repayment of secret profits

5.4 You must understand your pension

5.5 Too late and wrong forum – TTD is for Ombudsman for Long-term Insurance to decide on

5.6 Another failed bite at the cherry – spouse of still-alive member is not a complainant

5.7 Employer might have to pay disability benefit – if fund and insurer agree on claim

5.8 Another employer to pay a disability claim?

5.9 Pulling a fast one – there was a housing loan

5.10 Employer ordered to pay death benefit because it failed to register employee as member

5.11 Joint and several does not mean 50:50

6. International snippets: (page 19)

6.1 Euro area needs more integrated financial market supervision, says OECD’s Gurría

7. Contents of our previous issue (No. 257/15 January 2009) (page 21)

Issue No. 257/ 15 January 2009 of The Employee Benefits Monitor

Contents

1. Legislation [Page 2]

1.1 Assent by President in respect of Bills

1.2 Commencement dates

1.2.1 Insurance Laws Amendment Act, 2008

1.2.2 Taxation Laws Second Amendment Act, 2008 (Act No. 4 of 2008)

1.2.3 Special Pensions Amendment Act, 2008

2. FAIS [FINANCIAL ADVISORY AND INTERMEDIARY SERVICES ACT, 2002 [Page 4]

2.1 Licence withdrawal

2.2 Lifting of suspension

2.3 Suspension of licences

2.4 Exemption granted to Anglo

2.5 Amendments to fit and proper requirements

2.6 Amendment of general code of conduct for authorised financial services providers and representatives

2.7 Applications by representative bodies for recognition by the Financial Services Board

2.8 Determination of examination body criteria, 2008

2.9 Broker who leaves everything to clerk ordered to pay.

3. FSB matters [Page 8]

3.1 Beneficiary funds

3.2 "THE FSB WARNS THE PUBLIC TO BE CAREFUL WHEN BUYING FUNERAL POLICIES"

4. Case summaries [Page 9]

4.1 The judicial function

4.2 Registration of Local Government Pension Fund (LGPF) cancelled

5. International snippets [Page 11]

5.1 U.S. Employers Face More Than $108 Billion Pension Funding Tab in 2009

5.2 Fund Managers Optimistic for 2009

5.3 Financial ombudsman gears up for record year of complaints

6. Contents of latest publications [Page 14]

6.1 Contents of previous issue of The Employee Benefits Monitor

6.2 Contents of latest Health Cover Monitor

E B Monitor Issue No. 245B (15 November 2008)

Revenue Laws Amendment Bill, 2008: Preservation funds

Snapshot summary:

· Transition of old-style preservation funds: Such funds would have lost tax approval on 1 January 2009. They will have until 30 September 2009 to submit rules for the new approval regime.

· The once-off withdrawal rule will apply to each transferred amount.

· Preservation funds will be allowed to receive divorce benefits deducted from retirement fund benefits.

General topic: Retirement funds: Preservation funds

Specific topic: Income tax aspects of preservation funds

Recent relevant law (Starting with the most recent):

· Draft Revenue Laws Amendment Bill, 2008

· Taxation Laws Amendment Act, No. 3 of 2008

A. Participatory democracy process to Draft Revenue Laws Amendment Bill, 2008:

· NT media release 1 August 2008

· NT briefing to PCOF: 19 August 2008

· Public Presentations allowed to PCOF: 20 August 2008

· Special NT-providers meeting 27 August 2008 due to objections raised 20/8/2008 about lack of time

· Cut-off date for submissions to NT: 5 September 2008

· NT response to PCOF: 9 September 2008

Employee Benefits Monitor: No. 247 [14 November 2008]

Revenue Laws Amendment Bill, 2008

General topic: Retirement funds: Pension to provident fund transfers

Specific topic: Taxation of pension to provident fund transfers

Snapshot summary

A transfer from a pension to a provident fund will be deemed to be a lump sum withdrawal benefit in the hands of the member and taxed as a withdrawal benefit. The after-tax amount transferred should be regarded as an after-tax contribution to the provident fund (with no subsequent tax being required when withdrawn from the provident fund).

This will apply to any lump sum deemed to have accrued on or after 1 March 2009.

Contents

1. From the (June/July 2008) explanatory memorandum to the draft Revenue Laws Amendment Bill, 2008 and the draft Bill’s clauses [Page 2]

1.1 From the (June/July 2008) explanatory memorandum

1.2 Text of proposed changes: Draft Revenue Laws Amendment Bill, 2008

2. National Treasury’s briefing to PCOF: 19 August 2008 [Page 3]

3. Public submissions and SARS’ response [Page 3]

3.1 SAICA’s submission to PCOF

3.2 National Treasury’s feedback to PCOF (Draft Response Document 9 September 2008)

4. From NT’s 22 October 2008 explanatory memorandum to PCOF [Page 4]

5. Text of relevant amendments passed by NCOP on 13 November 2008: Revenue Laws Amendment Bill, 2008 [Page 5]

6. The old regime: The situation before the Revenue Laws Amendment Bill, 2008 [Page 8]

6.1 CIR Practice Note 14/9/1990

6.2 Commissioner for Inland Revenue 1993 letter to various tax officials (Receivers of revenue etc)

6.3 GN 1/95 (15 February 1995) Transfers from pension to provident funds in terms of the 14 September 1990 arrangement

Employee Benefits Monitor (Issue 242C – 29 October 2008)

Revenue Laws Amendment Bill, 2008: Extraordinary tax-free payments after leaving a fund

Snapshot summary:

A paragraph 2C was added to the Second Schedule with effect 1 January 2006. This was so that that certain unusual/extraordinary amounts paid after leaving a fund would be excluded from gross income i.e. would be tax-free. The extraordinary amounts were envisaged to be payable due to past unfair practices against members. Three kinds were envisaged: Early terminations by members (retirement annuity funds), surplus and secret profits. Paragraph 2C was subsequently amended to also mention the new types of funds (preservation funds) formally recognised by the ITA.

The drafting was bad as funds’ rules could also specify extraordinary payments arising after cessation of membership or winding-up, without any statutory parameters/context i.e. the concessions introduced by 2C are open to abuse: Take a low taxable benefit and thereafter receive a tax-free benefit. The amendment in the Revenue Laws Amendment Bill, 2008 requires that these extraordinary payments allowed by the rules and to be tax-free, must also be prescribed by the Minister in the Gazette.

The amendments also do catch-up tinkering with the definitions of pension and provident funds, to (a) allow such funds to make such extraordinary payments and (b) allow benefits contemplated in section 15A or 15E of the Pension Funds Act, 1956. These sections 15A and 15E deal with rights to use of actuarial surplus and utilisation of surplus for employers.

Contents

Part 2 Revenue Laws Amendment Bill, 2008: The relevant clauses passed by the National Assembly.

2.1 E B Monitor comment: Differences between draft Bill and approved Bill

2.2 The approved clauses

Part 1 Recent legislative tax history regarding the tax-free treatment of extraordinary payments (paragraph 2C of the Second Schedule of the Income Tax Act)

1.1 Draft Revenue Laws Amendment Bill, 2008 and explanatory memorandum

1.2 Taxation Laws Amendment Act, No. 3 of 2008

1.3. Taxation Laws Amendment Act, No. 8 of 2007

Employee Benefits Monitor (Issue 250 – 28 October 2008)

Contents

DA announces wish washy proposals

· Breaking the Cycle of Poverty by Extending Opportunity: Statement by Helen Zille: Leader of The Democratic Alliance Page 2

· Extract from the executive summary: The Elderly Page 3

· PART FOUR: Supporting the Elderly Page 4

Financial markets meltdown spurs SA accountancy body into action on accounting standards: Media release issued by Accounting Practices Board 28/10/2008 Page 8

Statement issued by the Pension Funds Adjudicator: MTHIMKHULU Vs NBC HOLDINGS (PTY) LTD AND COMPRA Page 9

£157 billion wiped off workers’ pensions: Value of defined contribution pension scheme assets have plummeted by nearly a third from £552 billion to £395 billion in the past 12 months - Aon LONDON, 27th October 2008 – Page 11

FSB Information Circular 7 OF 2008; Extensions in respect of funds to be terminated

Infinity’s Mel Cunningham in court over R28m fraud Page 12

Benefit Connection publishes the fee-based Employee Benefits Monitor and The Health Cover Monitor. The terms and conditions at www.ebmonitor.co.za and www.healthcovermonitor.co.za apply.

Articles, advertising and sponsorships are welcome.

Mike Thurtell

connection@icon.co.za

Employee Benefits Monitor (Issue 243B – 28 October 2008)

Snapshot summary

Maintenance payments: Revenue Laws Amendment Bill, 2008

What the new dispensation will be: An amended section 7(11) will make all maintenance payments (a) of a recurring nature and (b) deducted in terms of s37D(1)(d) of the Pension Funds Act, 1956 taxed as remuneration in the hands of the member and subject to PAYE. The Revenue Laws Amendment Act, 2007 had made this tax treatment specific to maintenance payments in respect of children only. [Section 37D(1)(d) of the Pension Funds Act is the section authorising a fund to deduct from a member’s benefit or minimum individual reserve, amounts payable in terms of divorce decrees and maintenance orders.]

When it will be effective? From the commencement of years of assessment ending on or after 1 January 2009.

What about court orders not falling within the scope of the above? Our understanding is that such payments are viewed as lump sum benefits because they fall outside the scope of s7(11). The new definition of lump sum benefit is a catch-all provision for all amounts “other than any amount deemed to be income accrued to a person in terms of section 7(11)”

What about maintenance deductions without court orders?

Section 37A(1) provides trustees with the discretion to deduct the whole or part of a member’s benefit and, without any court order required, to pay such deducted amount “ to any one or more of the dependants of the member or beneficiary or to a guardian or trustee for the benefit of such dependant or dependants during such period as it may determine.”

As these deductions are not determined by court orders, we assume that they are taxed in the normal way with the net amounts paid to trusts, beneficiaries and/or dependants.

Want the Bill? If you would like the Bill e-mailed, please send your request to connection@icon.co.za

About this issue of the Employee Benefits Monitor:

This issue is an update of mini- E B Monitor No. 52 which covered the tax treatment of maintenance payments as envisaged in the then draft Revenue Laws Amendment Bill, 2008. We also provided some relevant legislative history (The Revenue Laws Amendment Act, No. 35 of 2007). This is now Part 1 below.

Part 2 reviews the Bill as approved by PCOF on 22 October 2008, identifying any relevant changes made to the draft Bill.

Issue No. 239/ 27 October 2008 of The Employee Benefits Monitor

Contents

Case summaries of the Ombudsman for Long-term Insurance

· Beneficiary Nomination: Insured’s nomination of beneficiary refused by insurer—remedies of disappointed beneficiary (Page 2)

· Dread Disease- Cancer- definition– is the insurer’s interpretation of the definition too strict? (P3)

· Dread disease claim - interpretation of contract – complainant making second claim in respect of dread disease benefit – insurer refusing to pay claim on ground that benefit cancelled after first claim – policy wording did not support this interpretation – if any ambiguity in policy, wording to be construed contra proferentem (Page 5)

· Beneficiary nomination -Insured’s nomination of beneficiary refused by insurer—remedies of disappointed beneficiary (Page 6)

International snippets

· FIAP rejects the proposal to eliminate the Argentine individual accounts system (Page 8)

· Declaration of the Chairman of the UAFJP, Sebastián Palla (Page 9)

· The Pension Reform in Chile; New Benefits of the Chilean Pension System Come Into Effect (Page 11)

· [UK] NAPF launches best practice principles for investment advice (Page 12)

· Nordic countries continue to lead the way on EU “Lisbon Goals”

And a reminder …

Access to The Employee Benefits Monitor is limited to licensed users, to whom usernames and passwords are issued to access ebmonitor.co.za Distribution, circulation, copying or any further use is subject to Benefit Connection providing written permission and the payment of fees determined by Benefit Connection.

Articles, adverts and sponsorships are welcome.

Benefit Connection is an independent, non-partisan provider of technical legal and marketing employee benefits support. We publish The Employee Benefits Monitor and The Health Cover Monitor, which are fee-based information products. Requests for bespoke services are considered.

Mike Thurtell

connection@icon.co.za

Issue No. 237/ 26 September 2008 of The Employee Benefits Monitor

Editorial

The fiduciary duties of trustees of medical scheme and retirement funds are based on the fiduciary duties arising from the relationship between directors and their companies.

· What are the features of such fiduciary relationships?

· What are the consequences of unlawful and illegal actions?

· May our regulators be held liable?

These are topical issues being examined by our courts and the Pension Funds Adjudicator.

Given the criminality of the estimated 70% of former medical schemes (and their trustees and principal officers) which now contravene the Medical Schemes Act and yet conduct themselves as medical schemes, we are in for interesting times. Will the Registrar of Medical Schemes escape liability for his doing absolutely nothing to stop such schemes from continuing to act as medical schemes? Will such arrangements escape prosecution for failing to register as long-term insurers, as required by the Long-term Insurance Act when they no longer comply with the Medical Schemes Act.

The list of statutory offences is quite long …

At the moment political ideology is being followed, while the law is being brazenly ignored.

For those who are interested in the law (we leave you to decide on your ideology) we provide this issue of The Employee Benefits Monitor, which provides summaries and extracts of recent judgments, plus older judgments which relate to the topics under discussion.

Contents

A dishonourable medical scheme, a greedy broker and a German disguised as a French Parisian cripple: Supreme Court of Appeal Afrisure and de Villiers v Watson and Publiserve [Page 2]

To what extent may regulators be held liable? JSE Securities Exchange SA v Joint Municipal Pension Fund (High Court: Transvaal Provincial Division) [Page 4]

Trustees’ fiduciary duties - Phillips v Fieldstone [Supreme Court of Appeal November - 2003 [Page 5]

Trustees must decide what is in their scheme’s interest - PPWAWU Provident Fund v The Chemical, Energy, Paper, Printing, Wood and Allied Workers Union (Wits High Court 2007) [Page 5]

Breach of fiduciary duties: Secret profits and “corporate opportunities” - Da Silva v C H Chemicals Supreme Court of Appeal 2008 [Page 6]

DOH employment unfair discrimination - Martin Gordon v Department of Health: Kwazulu-Natal (Supreme Court of Appeal 2008) [Page 8]

Thank you for your interest in The Employee Benefits Monitor. Your articles, statements etc for publication remain welcome. Please send to connection@icon.co.za

Regards

Mike Thurtell

Issue No. 235/ 11 September 2008 of The Employee Benefits Monitor

Editorial

1. This is quite a long issue of The E B Monitor. Instead of printing the whole document we suggest you first identify which articles are of interest/relevance.

2. If you would like us to e-mail a Board Notice or other document to you, please e-mail connection@icon.co.za (but only if you are a subscriber).

3. Should you wish to contribute an article to The Employee Benefits Monitor or/and www.ebmonitor.co.za please contact connection@icon.co.za

4. The terms and conditions at www.ebmonitor.co.za apply to this publication, which is fee-based and prohibits distribution, circulation or reproduction

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Contents

1. Revenue Laws Amendments Bills, 2008 [Page 2]

1.1 Communication from Employee Benefits Monitor 2 September 2008: A list of mini-E B Monitors

1.2 Portfolio Committee on Finance: Report-Back Hearings: What National Treasury thinks of the submissions

2. Legislative changes [Page 12]

2.1 Draft changes to Schedule L fees: Pension Funds Act, 1956: A comparison with the previous two sets of fees

2.2 State grants: A quick overview

2.3 Other legislative matters: A short list

3. Healthcare News [Page 20]

A list of the contents of the latest issue of The Health Cover Monitor

4. Social security [Page 21]

Keynote Address by Mr Vusi Madonsela, Director General - National Department of Social Development, on the occasion of the 2008 Institute Of Retirement Funds Conference

Durban ICC

Mini E B Monitor No 53/2008 Version 1.1: 27 August 2008

General topic: Retirement funds: Withdrawals

Specific topic: Default withdrawals: Postponing accrual until member elects to take benefit in cash or preserve the withdrawal benefit

Recent relevant law:

· Draft Revenue Laws Amendment Bill, 2008

The purpose of mini-EBM’s:

These “mini EBMS” have and are been developed as a result of our battling to follow the legal amendments/corrections upon amendments/corrections upon amendments/corrections, often before the law to be amended/corrected has even been assented to by the President, and often contradicting or only partially in line with the stated intention. If you are in the same boat, we hope that you find these mini-EBM’s useful. Subscribers would like their comments/corrections included, please e-mail connection@icon.co.za . Use at own risk. Mini-EBM’s reflect our researched and experience-based opinion and often do not agree with the printed and electronic media, the Pension Funds Adjudicator and communications from insurers, administrators, Treasury, the FSB and others. This document is not the final word on any topic but you may find aspects worthy of consideration in your deliberations.

Contents:

A. Participatory democracy process

B. Snapshot summary

C. NT’s explanation

D. Relevant legislative change.

A. Participatory democracy process to Draft Revenue Laws Amendment Bill, 2008:

· NT media release 1 August 2008

· NT briefing to PCOF: 19 August 2008

· Public Presentations allowed to PCOF: 20 August 2008

· Special NT-providers meeting 27 August 2008 due to objections raised 20/8/2008 about lack of time

· Cut-off date for submissions to NT: 5 September 2008

· NT response to PCOF: 9 September 2008

B. Snapshot summary:

A member’s delayed decision-making results in automatic tax accrual of his/her withdrawal benefit, which NT believes tends to pressure a member into take his/her benefit in cash, as tax is levied irrespective of whether or not the benefit is taken in cash. The Draft Revenue Laws Amendment Bill, 2008 aims to encourage preservation of benefits by postponing accrual until a member elects to take the benefit in cash or transfer it to another fund.

Mini E B Monitor No 52/2008 Version 1:1 22 August 2008

General topic: Retirement funds: Maintenance payments

Specific topic: Tax treatment of maintenance payments deducted from retirement funds

Recent relevant law (Starting with the most recent):

· Additional amendments to draft Revenue Laws Amendment Bill, 2008, published, 21 August 2008

· Draft Revenue Laws Amendment Bill, 2008

· Taxation Laws Amendment Act, No. 3 of 2008

· Taxation Laws Amendment Act, No. 8 of 2007

The purpose of mini-EBM’s:

Contents:

A. Participatory democracy process

B. Snapshot summary

C. Discussion, text and history of relevant sections of the draft Bill and ITA.

A. Participatory democracy process to Draft Revenue Laws Amendment Bill, 2008:

· NT media release 1 August 2008

· NT briefing to PCOF: 19 August 2008

· Public Presentations allowed to PCOF: 20 August 2008

· Additional amendments to draft Bill published 21 August 2008 [No explanatory summary]

· Special NT-providers meeting 27 August 2008 due to objections raised 20/8/2008 about lack of time

· Cut-off date for submissions to NT: 5 September 2008

· NT response to PCOF: 9 September 2008

Mini E B Monitor No 56/2008 Version 1.1: 25 August 2008

General topic: Retirement funds: Divorce orders

Specific topic: Tax aspects of divorce order deductions off retirement fund benefits

Recent relevant law: Draft Revenue Laws Amendment Bill, 2008

The purpose of mini-EBM’s:

Contents:

A. Participatory democracy process

B. Snapshot summary

C. National Treasury’s explanations (Draft Revenue Laws Amendment Bill, 2008)

D. Relevant legislative amendments (Draft Revenue Laws Amendment Bill, 2008).

A. Participatory democracy process to Draft Revenue Laws Amendment Bill, 2008:

· NT media release 1 August 2008

· NT briefing to PCOF: 19 August 2008

· Public Presentations allowed to PCOF: 20 August 2008

· Special NT-providers meeting 27 August 2008 due to objections raised 20/8/2008 about lack of time

· Cut-off date for submissions to NT: 5 September 2008

· NT response to PCOF: 9 September 2008

B. Snapshot summary:

The amount awarded in terms of a divorce order where the amount accrues to the non-member on or after 1 March 2009 will be taxed in the hands of the non-member’s former spouse. This new regime is based on the new standalone rate schedule applicable to withdrawal benefits which comes into effect on 1 March 2009. The non-member may also elect to transfer his or her benefit to his or her own retirement fund without triggering any tax.

This new regimes is a simplified regime and should provide fund members and non-member spouses with more certainty around the tax treatment of amounts awarded in terms of divorce orders.”

Mini E B Monitor No 52/2008 Version 1:1 22 August 2008

General topic: Retirement funds: Maintenance payments

Specific topic: Tax treatment of maintenance payments deducted from retirement funds

Recent relevant law (Starting with the most recent):

· Additional amendments to draft Revenue Laws Amendment Bill, 2008, published, 21 August 2008

· Draft Revenue Laws Amendment Bill, 2008

· Taxation Laws Amendment Act, No. 3 of 2008

· Taxation Laws Amendment Act, No. 8 of 2007

The purpose of mini-EBM’s:

Contents:

A. Participatory democracy process

B. Snapshot summary

C. Discussion, text and history of relevant sections of the draft Bill and ITA.

A. Participatory democracy process to Draft Revenue Laws Amendment Bill, 2008:

· NT media release 1 August 2008

· NT briefing to PCOF: 19 August 2008

· Public Presentations allowed to PCOF: 20 August 2008

· Additional amendments to draft Bill published 21 August 2008 [No explanatory summary]

· Special NT-providers meeting 27 August 2008 due to objections raised 20/8/2008 about lack of time

· Cut-off date for submissions to NT: 5 September 2008

· NT response to PCOF: 9 September 2008

B. Snapshot summary:

As explained by National Treasury:

Tax on withdrawal benefits (recurring payments)

Section 7(11) was amended during 2007 to recognise payments by retirement funds in terms of maintenance orders for the maintenance of a child. A new section 7(12)* was inserted to recognise recurring payments made by retirement funds in terms of all maintenance orders. The wording in the 2^nd Schedule* was also amended to specifically exclude these recurring payments from being taxed in terms of this schedule. These payments are taxed in the hands of the member (and subject to PAYE) as “remuneration”.

* EBM: The “was” may be confusing, as these are proposed amendments contained in the draft Revenue Laws Amendment Bill, 2008

Mini E B Monitor No 51/2008 Version 1.1: 21 August 2008

General topic: Retirement funds: Withdrawals

Specific topic: Tax treatment of withdrawals

Recent relevant law (Starting with the most recent):

· Additional amendments to draft Revenue Laws Amendment Bill, 2008, published, 21 August 2008

· Draft Revenue Laws Amendment Bill, 2008

· Taxation Laws Amendment Act, No. 3 of 2008

· Revenue Laws Amendment Act, No. 35 of 2007

· Taxation Laws Amendment Act, No. 8 of 2007

The purpose of mini-EBM’s:

Contents:

A. Participatory democracy process

B. Snapshot summary

C. National Treasury’s explanations

D. Submissions to PCOF

E. Recent relevant legislative amendments.

A. Participatory democracy process to Draft Revenue Laws Amendment Bill, 2008:

· NT media release 1 August 2008

· NT briefing to PCOF: 19 August 2008

· Public Presentations allowed to PCOF: 20 August 2008

· Special NT-providers meeting 27 August 2008 due to objections raised 20/8/2008 about lack of time

· Cut-off date for submissions to NT: 5 September 2008

· NT response to PCOF: 9 September 2008

Mini E B Monitor No 50/2008 Version 1.1: 15 August 2008

General topic: Retirement funds: Extraordinary tax-free payments after leaving a fund

Specific topic: Paragraph 2C of the Income Tax Act, 1962

Recent relevant law (Starting with the most recent):

· Additional amendments to draft Revenue Laws Amendment Bill, 2008, published, 21 August 2008

· Draft Revenue Laws Amendment Bill, 2008

· Taxation Laws Amendment Act, No. 3 of 2008

· Taxation Laws Amendment Act, No. 8 of 2007

The purpose of mini-EBM’s:

Contents:

A. Participatory democracy process

B. Snapshot summary

C. History of the text of paragraph 2C and extracts from the relevant explanatory memoranda to the Bills.

Issue No. 233/ 30 July 2008 of The Employee Benefits Monitor

Editorial

This issue provides a consolidated overview of technical news covered at our E B Monitor site during this month. Hopefully there will not be much that is new news (although there has been no public participation in most of the Notices) and the reader will be able to quickly glance over the items, using them as a checklist for evaluating if any new action is required within your fund or business. If you would like us to e-mail a Board Notice or other document, please e-mail connection@icon.co.za (but only if you are a subscriber).

---------------------------------------------

Contents

1. Financial Services Board Act, 1990 – Levies on financial institutions [Page 2]

2. Pension Funds Act, 1956 [Page 2]

2.1 Cancellation of registration

2.2 Report of the independent auditors retirement annuity funds, umbrella funds and preservation funds

3. FAIS [Financial Advisory and Intermediary Services Act, 2002 (ACT No. 37 of 2002)] [Page 2]

3.1 Minimum experience exemption for representatives of Category 1 FSP’s extended to Categories 2 and 3 FSP’s [Page 2]

3.2 Hedge fund FSP risk disclosures [Page 3]

3.3 Approval of a Foreign Qualification, 2008 [Page 4]

3.4 Lifting of Tri-Linear Asset Management's Suspension [Page 5]

3.5 Update on Licenses for Financial Services Providers [Page 5]

3.6 Withdrawal of authorizations [Page 6]

3.7 Suspension of authorizations [Page 7]

3.8 Form of external auditor’s report [Page 7]

3.9 Qualifications Application Form [Page 10]

3.10 2008 Compliance Report [Page 10]

4. Competition Act [Page 12]

5. Information letters from the Financial Services Board: Unlawful inducements [Page 12]

6. Parliamentary committee meetings [Page 13]

6.1 Forthcoming meetings of parliamentary committees [Page 13]

6.2 Hearings on the draft Revenue Laws Amendment Bill, 2008 and draft Revenue Laws Second Amendment Bill [Page 14]

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Other

· Should you wish to contribute an article to The Employee Benefits Monitor or/and www.ebmonitor.co.za please contact connection@icon.co.za

· The terms and conditions at www.ebmonitor.co.za apply to this publication, which is fee-based and prohibits distribution, circulation or reproduction.

Issue No. 231/ 8 July 2008 of The Employee Benefits Monitor

Editorial

· This issue comprises a selection of summaries of cases recently published at ebmonitor.co.za

· We provide snapshot summaries in Part A. For those who would like more detail and commentary regarding one or more of the cases, please see Part B.

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Contents

Part A: Snapshot summaries [Page 2]

Pension funds and medical schemes might pay for their managers’ curatorship – and have to pay lesser benefits SCA judgment: Ovation v Executive Officer Financial Services Board (519/2007) [2008] ZASCA 82 (02 June 2008)

Surplus legislation: A pre-December 2001 registered rule without pre-December 2001 section 14 approval doesn’t mean pre-December 2001 law applies SCA judgment: Edcon Pension Fund v The Financial Services Board of Appeal and Another (349/07) [2008] ZASCA 65 (29 May 2008)

Re-employment of pensioners – don’t assume that you know what you are doing: Adjudicator’s determination: Lambourne v Novartis Provident Fund and Novartis SA Limited

A member’s transfer from one pension fund to another is not tax-free if the rules only provide for cash benefits on withdrawal Adjudicator’s determination: Fortmann v St Martin’s School Pension Fund, Old Mutual and St Benedict’s College Pension Fund

Post-retirement medical contribution subsidies – Make sure you know who you are dealing with Adjudicator’s determination: Weeks v Metropolitan Life, Commercial Union and Alexander Forbes

Part B: summaries [Page 3]

· [Page 3] Ovation v Executive Officer Financial Services Board (519/2007) [2008] ZASCA 82 (02 June 2008)

· [Page 7] Edcon Pension Fund v The Financial Services Board of Appeal and Another (349/07) [2008] ZASCA 65 (29 May 2008)

· [Page 10] Lambourne v Novartis Provident Fund and Novartis SA Limited

· [Page 13] Fortmann v St Martin’s School Pension Fund, Old Mutual and St Benedict’s College Pension Fund

· [Page 16] Weeks v Metropolitan Life, Commercial Union and Alexander Forbes

Other

Should you wish to contribute an article to The Employee Benefits Monitor or/and www.ebmonitor.co.za please contact connection@icon.co.za

The terms and conditions at www.ebmonitor.co.za apply to this publication.

Issue No. 229/ 27 June 2008 of The Employee Benefits Monitor

Editorial and Contents

Financial Services Laws General Amendment Bill, 2008 [B21-B]

National Assembly approves amended Bill

The above Bill, as amended by the Portfolio Committee on Finance (National Assembly) and now numbered B21-B, was approved the National Assembly on 24 June 2008. Speeches by parliamentarians are available at ebmonitor.co.za. If you are a subscriber and would like us to e-mail B21-B to you, please e-mail connection@icon.co.za

B21-B is on the Order Paper of the NCOP (National Council of Provinces) for its approval this morning. Thereafter it will be submitted to the President for his assent.

What this issue of The E B Monitor is about

This is the second in our series of E B Monitors on the Bill, the Insurance Laws Amendment Bill and the Special Pensions Bill. The legislation is highly technical in nature and we are attempting to provide information and insights in manageable packages. The Financial Services Laws General Amendment Bill, 2008 [B21-B] amends 12 statutes.

Ours is not the final word on anything, so please note the need for you to form your own opinion and obtain advice where appropriate.

Our previous issue (No. 228 – 18 June 2008) of The Employee Benefits Monitor focused on beneficiary funds.

[Words in bold type in square brackets indicate what omissions from existing legislation the Bill will introduce.]

Words underlined with a solid line indicate envisaged insertions in existing legislation.

Other news

Our website ebmonitor.co.za continues to provide most of our news and case summaries for subscribers. A number of case summaries and articles have been published over the last ten days.

Your views

Please send your articles, opinions etc for publication to connection@icon.co.za

Contents

· Unclaimed benefits – Page 2

· Principal officers – Page 5

· Limitation of liability – Page 9

· Auditors and valuators – Page 10

Issue No. 228/ 18 June 2008 of The Employee Benefits Monitor

Financial Services Laws General Amendment Bill, 2008

What this issue of The E B Monitor is about

In issue H 224 (14 May 2008) we reviewed the Bill’s provisions regarding beneficiary funds – a new type of pension fund intended to replace umbrella trust funds for the receipt and payment of death benefits. We also summarized Treasury’s and the FSB’s briefing to the parliamentary committee of finance (PCOF) on 14 May 2008.

Since then there have been many oral and written submissions (listed in Part 3 of this issue), followed by questions by PCOF, oral responses by Treasury/FSB and numerous changes to the Bill. PCOF-approved amendments were finalised on Thursday and the final list of changes approved by the state law advisor were received by PCOF today. These will be applied to the Bill to constitute Bill 21-B which will be debated (i.e. approved) by the National Assembly on 24 June 2008.

This issue of The E B Monitor is technical in nature, providing and discussing the text of the amended Bill, insofar as it deals with beneficiary funds. The concept of a beneficiary fund is still extremely vague. However, we thought that some readers will want to understand what the issues and questions are that will need resolving, so that they can evaluate more concrete developments as they unfold in the near future. We are probably the only external observers who attended all the PCOF public meetings from start to finish and read the submissions.

For those who don’t want detail, here is a summary:

· Majors may nominate a trust (This is a change from the tabled version reviewed in Issue H 224)

· Members may nominate a trust (This is a change from the tabled version reviewed in Issue H 224) Although the intention is to continue allowing payment to testamentary trusts, the text of the amended Bill did not limit the nomination to such trusts (our interpretation is that payment to umbrella trusts will be permissible provided the member has nominated such trust).

· Payment after the commencement date of this legislation (not known) will not be allowed to a trust (except for the aforementioned circumstances). Instead, a new type of pension fund called a beneficiary fund must be registered if payment is not made to the beneficiary or caregiver.

· Nobody knows how beneficiary funds work. Treasury is still working on tax specifications. All other detail will somehow emerge through a combination of regulation, exemptions and approval of rules. According to Treasury, the devil is in the detail and no detail is available.

· Trusts and beneficiary funds have different legal characteristics/profiles. One may not simply convert from a trust to a beneficiary fund or transfer assets from a trust to a beneficiary fund. The reason given is that under trusts the assets usually vest in the beneficiaries while under a beneficiary fund the assets vest in the fund. Approval of beneficiaries will therefore be one legal requirement for extracting from a trust.

· At some stage Treasury might introduce a central unclaimed benefits beneficiary fund. That is not part of this Bill.

Issue No. 227/ 29 May 2008 of The Employee Benefits Monitor

Insurance Laws Amendment Bill, 2008

Discussions on the Financial Services Laws Amendment Bill, 2008 continue next week at the parliamentary committee of finance (PCOF) [Pensions on divorce, Adjudicator wanting jurisdiction over disability policies etc]

Treasury was not able to finalise the text of amendments which it is willing to agree to.

It did however find time to brief the committee on another Bill, the Insurance Laws Amendment Bill, even though that Bill wasn’t ready in time for publication and Treasury was still in “discussion” with the national department of health over its amendments to deal with demarcation of medical scheme business.

The Bill was published this morning. The text of the Bill used in this issue of The E B Monitor is from today’s Bill, except that used in the old article from earlier this month regarding demarcation (today’s Bill is substantively similar, though).

PCOF meets tomorrow to hear submissions from Council for Medical Schemes, LOA and others. Our site ebmonitor.co.za will keep subscribers updated.

In the meantime this issue focuses on the following aspects of the Bill as per the briefing yesterday (Wednesday 28 May 2008). Due to length and complexity of the issues, we will discuss other amendments in the near future. However, we are happy to e-mail Treasury’s slides and briefing to subscribers.

Regards

Mike Thurtell

connection@icon.co.za

Contents:

Risk-only schemes/funds illegal – Page 2

Funeral benefits – “Assistance policies” – Page 4

Long-term insurers exempted from registering as long-term insurers – Page 6

Bonus declarations for with-profit policies – Page 7

Update on medical scheme business v other forms of health insurance – Page 9

Binder agreements – Page 15

Issue No. 226/ 20 May 2008 of The Employee Benefits Monitor

South Africa’s “new” social security dispensation warms up … slowly

Editorial

Low-income earners out of NSSF?

The Minister of Social Development has made announcements which tend to confirm the envisaged introduction of several forms of hidden double taxation – higher income and healthier persons subsidising the poorer (but not the poor); removal of tax incentives from the wealthier, contribution subsidies paid by the wealthier, and defined benefit cross-subsidies. While the mechanisms for social health insurance (SHI) will differ, analogous socialist principles are also envisaged, although the noises made by BUSA against these issues in the SHI context seem to be more muted in the retirement funding and risk benefits context.

Perhaps to keep some perspective one needs to bear in mind that it seems that low-income earners will fall outside of the scope of the changes currently underway.

Why?

Low-income earners tend to be viewed as those earning approximately R1000 or less per month. In South Africa this makes up LSM’s 1 to 5 (Lifestyle Measurement Groups).

LSM1-5 constitute about 74% of South African households – approximately 20 million adults in 8.3 million households, with probably less than 8% participating in occupational retirement vehicles.

Persons in the LSM 1 to 5 groups receiving state old age pensions (“SOAP’s”) are in receipt of significantly higher incomes than LSM 1 to 5 in employment. There are more dependants in households receiving old age grants, than the other households. As a recent reports says: “Only about 20% of working age people in these LSMs have any kind of formal or semi-formal employment, while 22% are reliant on state grants, and the remainder move between unemployment and the informal sector. This results in low and unstable personal incomes, usually less than R1000 per month.”

[Old-age saving by low-income South Africans: Report prepared for FinMark Trust and the South African Savings Institute by Genesis Analytics (Pty) Ltd, who also conducted research into death and disability cover for a new social security dispensation. That report is available at www.finance.gov.za while the latest report can be viewed at www.finmark.org March 2008]

The graphs used by Genesis Analytics paint a good picture:

[Graphs omitted]

Contents of this issue

· All earning R1000+ per month to contribute to National Social Security Fund (NSSF) - Address by the Minister of Social Development, Dr Zola Skweyiya, on the second reading of the Social Assistance Amendment Bill

· Minister Skweyiya assures public that provident and pension funds will not be raided

· Outline of a social security and retirement savings framework - Discussion document for the inter-departmental task team on social security and retirement reform

· BUSA circular - note on the workshop held by Treasury on government’s proposed social security and retirement reform

Issue No. 225/ 14 May 2008 of The Employee Benefits Monitor

Draft Issue H 225 – still to be finalized and then subjected to comment and peer review

Financial Services Laws General Amendment Bill, 2008 [B21 – 2008] as tabled on 14 May 2008.

This issue focuses on the division of retirement benefits/interest on divorce and the Treasury and FSB’s briefing relating thereto, to the parliamentary committee of finance on 14 May 2008.

Snapshot summary … The story so far …

1. The Divorce Act overrides the Pension Funds Act: The legislation is governed by the Divorce Act whose s7 overrides the Pension Funds Act, 1956. The Supreme Court of Appeal has ruled on this and determinations of the Pension Funds Adjudicator have also noted the overriding of the Divorce Act. Trustees who permit the paying out of pension interest before accrual of the benefits therefore act unlawfully as neither they nor the Pension Funds Adjudicator may override such valid court orders. Treasury, the FSB and the latest Adjudicator seem to be oblivious.

2. The Pension Funds Adjudicator does not have jurisdiction over High Court orders: This is according to at least four determinations of the Pension Funds Adjudicator. The latest Adjudicator, although berating those who do not comply with her determinations, has failed to follow such determinations or if in disagreement, failed to explain why she now has such jurisdiction. Likewise, neither Tresaury nor the FSB seems to be aware of this jurisdictional issue.

3. Legislative and executive jurisdiction over the division of retirement benefits/interest on divorce falls with the Department of Justice and the parliamentary committee of justice: The S A Law Reform Commission has been investigating this topic since at least 1986. The last recommendation was for a separate Division of Retirement Fund Benefits on Divorce Act. The proposed Act was developed by a working group which included SARS, the Institute of Retirement Funds and Life Offices Association. Cosatu could not find the time to participate. The Department of Justice and Constitutional Development has confirmed to us that “The proposed legislation is still on our extended list of legislation to be dealt with. It has not yet been dealt with and will be dealt with as soon as circumstances permit.”

4. Existing divorce orders do take into account lost interest: National Treasury got parliament to amend the Pension Funds Act (s37D) to allow payment in respect of pension interest (unaccrued pension benefits) before accrual. As far as we can see no disclosure has to date been made of points 1 to 3 above to the parliamentary committee of finance, nor has Treasury, the FSB and the latest Pension Funds Adjudicator showed any insight into the issues. No explanation has been made as to how the conflict with the Divorce Act is to be managed. There is no evidence that the FSB or Treasury is even aware of the issues. Simplistic arguments of “equity” have instead been thrown into the air, without any understanding that past negotiations take into account – either explicitly or implicitly – “lost interest” from date of divorce to accrual of benefits.

5. Lack of impeachment proceedings against Adjudicators: Despite the attitude of the various persons occupying the position of Pension Funds Adjudicator and their berating of others, they have all:

(a) Failed to be consistent with their own determinations

(b) Failed to be consistent with the determinations of previous Adjudicators (obviously not applicable to the first Adjudicator)

(d) Failed to subject themselves to legislation

(e) Been selective about which aspects of previous case law and determinations they will cite.

Subscribers to The Employee Benefits Monitor will be aware of our research into these matters, including Review Papers on the failure to understand the rules are supreme fallacy, minors’ death benefits and trusts, non-existent s37D provisions letting ABSA off scot-free, preservation funds, pensions on divorce, contribution failures etc. For ridiculous explanations of pensions law provided by the FSB and Treasury to PCOF last year, please see the relevant issues of The Employee Benefits Monitor.

6. S37D does not apply to exiting court orders (or any as we noted above): As indicated in our previous coverage, the Pension Funds Amendment Bill, 2007 did not cater for existing court orders and Treasury promised to engage in consultations over this issue. At the PCOF meeting on 14 May 2008 Treasury’s Ferreira said that it was always the intention to apply the legislation to current divorce orders. FSB’s Boyd explained to a parliamentary committee member that he was confused, as the discussion was only about interest. [Presumably Boyd would find a way of explaining why he and his mates from Treasury also told the committee that bargaining council funds’ structures e.g. disability benefits, would also be catered for even though registered under the Pension Funds Act, like other registered bargaining council funds. Then with his first ever directive he said all such funds must be fully comply with the Act like other such existing registered bargaining council funds. Asked to explain his and Dixon’s misleading of PCOF, we were told “No comment”. Presumably it would be futile to ask him and Dixon if they had seen the Budlender report when they addressed PCOF, particularly that report’s views on Mr Boyd’s understanding of such funds and his comments to court.]

7. The Bill tabled in parliament purports to make s37D apply to exiting court orders. Treasury’s Ferreira said that two current court applications were a waste of time. No reference or mention has been made of any of the above issues.Simpel né?

Contents

· The S A Law Reform Commission and its work: Extract from December 2007 article of The Employee Benefits Monitor [Page 3]

· Case law regarding the law of retirement benefits and divorce (Still being worked on) [Page 12]

· Amnesia rules – Ok?

Issue No. 224/ 14 May 2008 of The Employee Benefits Monitor

Financial Services Laws General Amendment Bill, 2008 [B21 – 2008] as tabled on 14 May 2008.

This issue focuses on beneficiary funds and the Treasury and FSB’s briefing relating thereto, to the parliamentary committee of finance on 14 May 2008.

Tomorrow’s will focus on divorce, as a committee member would like to refer our comments/analysis to the state law advisor, as the Treasury and FSB did not disclose to the committee that the Divorce Act overrides the Pension Funds Act and therefore compliance with the FSB’s changes to s37D conflict with the Divorce Act. Nor was the committee advised that jurisdiction over this topic lies with the department of Justice and the portfolio committee of justice, which as we reported last year, is still a draft Bill on that department’s list. The Draft bill is as recommended by the S A Law Commission’s report, which was also not mentioned to the portfolio committee. Nor has Treasury and the FSB noted that the first Pension Funds Adjudicator ruled that his office does not have jurisdiction over this topic, which is not a “complaint”.

We will update this issue in line with submissions to be made to the parliamentary committee of finance meeting on Friday as well as the committee’s deliberations.

The Bill is what the state law advisor calls a “rommelkas” covering a range of topics. We will produce more issues of The Employee Benefits Monitor dealing with some of these.

Subscribers who would like us to e-mail the briefing’s documents, please e-mail connection@icon.co.za Please note that the references may be incorrect/need updating as the briefing was based on a Bill submitted to the state law advisor and not the one passed by that advisor and tabled in parliament this morning.

Documents we can convert to pdf:

· Presentation by the Financial Services Board to the portfolio committee of finance

· National Treasury’s presentation

· National Treasury/FSB: General Financial Services Laws Amendment Bill, 2008: Motivation for proposed amendments (EBM: a concise clause by clause overview)

· The Bill.

If you would like to include any comments, corrections etc in the next updated issue please e-mail to connection@icon.co.za

Issue No. 222/ 21 April 2008 of The Employee Benefits Monitor

Contents

In this issue of The Employee Benefits Monitor we present our case summaries of the following determinations issued by the Pension Funds Adjudicator

Bendie v MCI Provident Fund [Page 2]

A fund’s board of trustees has breached its fiduciary duties if it fails to keep members’ historical records. Even if there is a change in administrator and the old administrator has to advise the Registrar that records have been handed over, “Ultimately, the responsibility to keep the records lies with the fund in terms of the provisions of the Act.”

Bray v Lifestyle Retirement Preserver Pension Plan and Liberty Group Limited [Page 3]

Liberty messes up death benefit communication to widow

The late member’s spouse wanted a death benefit calculated to take into account investment growth after the death of the member up to date of payment (R52 459.12), whereas she had only been paid a benefit calculated as at date of death of her husband. The day after receiving the payment she had received a letter from Liberty advising her of the higher value. The Principal Officer apologizes to the Adjudicator but the complaint is nevertheless dismissed. We discuss the issue of misrepresentation.

Diale v Corporate Selection Retirement Fund [Page 6]

Labour disputes must be settled before the Adjudicator considers the pensions dispute

The reason for a member’s cessation of service (e.g. retirement v dismissal v resignation) has often been important in determining the largesse of a member’s benefit, particularly before minimum benefits legislation.

Readers will be aware from the 2006 Alais and Harrington v Telkom and Old Mutual determination (case summary also provided at page 8) that the Adjudicator has held that the CCMA forum is the correct one to deal with disputes over whether a member has been retrenched or taken early retirement: "While the issue in this matter has a pension component to it, it is my view that it is nonetheless essentially a labour issue between the employer and the complainants. That the resolution thereof has pension consequences is not, by itself, sufficient to clothe the adjudicator with jurisdiction." The Adjudicator has had to deal with the same principle in a new determination - Diale, reviewed herein.

Mabuza vs Mineworkers Provident Fund [Page 11]

Adjudicator thinks she’s done a first – again – and thinks minors’ benefits must be paid to guardians - again

Like so many other topics, the Pension Funds Adjudicator does not seem to be aware of analogous previous determinations, instead issuing attention-grapping statements labelled “Landmark ruling”. Second, the Adjudicator continues to think her office has been consistent with determinations about minors’ death benefits, cites some determinations, ignores court judgments and thinks common law overrides s37C. We review the case law and again repeat why minors’ death benefits may be paid into trusts, as confirmed by the Supreme Court of Appeal.

Issue No. 221/ 14 April 2008 of The Employee Benefits Monitor

Contents

In this issue of The Employee Benefits Monitor:

Case summaries of The FAIS Ombud [Page 2]

FAIS Ombud rules broker must bear loss for negligence
Broker did not give wrong advice, FAIS deputy ombud rules
Onus is on insured to ensure premiums are paid, says Ombud
Company liable for loss caused by its employee broker

News from the LOA [Page 11]

Consumers spend record R103-billion on life insurance premiums

News snippets[Page 13]

· “Alexander Forbes Financial Services (Pty) Ltd letter to clients

· Fidentia fugitive nabbed

· Health cover news

Should you wish to contribute an article to The Employee Benefits Monitor or/and www.ebmonitor.co.za please contact connection@icon.co.za

Access to The Employee Benefits Monitor is fee-based and subject to the Terms and Conditions at www.ebmonitor.co.za

Healthcare news is available from our sister publication The Health Cover Monitor at www.healthcovermonitor.co.za

Issue No. 218/ 27 February 2008 of The Employee Benefits Monitor

Editorial

Treasury describes the following as an urgent policy matter, in a media release relating to the draft Taxation Laws Amendment Bill, 2008.:

“ The proposed legislation clarifies pension tax administration by codifying and clarifying key pension practices and interpretations within the Income Tax Act. The legislation also paves the way for much of the regime to be shifted to the Pensions Act so that regulation is mainly handled by the Financial Services Board (rather than dual oversight by the Financial Services Board and the South African Revenue Service).”

The parliamentary committee of finance meets on 5 March 2008 to be briefed. We will attend the briefing and report thereon. In the interim we provide extracts from:

· The explanatory memorandum; and

· The draft Bill.

Some other recent headlines and articles at www.ebmonitor.co.za

Specialist tribunals: Pensions surplus [FSB Information circular 25/2/2008]

The broker is not the client’s keeper, Says FAIS Ombud

Social Development MINMEC adopts programme of action

Contractual savings in the life insurance industry

Budget 2008 and Pillar 0: Issue H 127 of The E B Monitor

South African (SA) Human Rights Commission welcomes the President's announcement of equality in the provision old age grant

Both spouses must be made aware of insurance exclusions, says FAIS Deputy Ombud

Taxation Laws Amendment Bills, 2008: General Overview

Changing the means test: Government’s intentions [Extract from Budget Review]

Equalisation of retirement ages – how Manuel ducked the issue for the next generation – the sting hidden in Chapter 6

Social grants

Streamlining retirement fund registration and changing pre-retirement withdrawal defaults (extract from Annexure C of Budget documents)

Poverty reduction and social security

Budget Monitor

International snippets: Employee Benefits: Where Money Comes From, Where It Goes (EBRI); CALL FOR PAPERS: Financial security in retirement (provisional title) (CERPS); Pensions trustees fear private equity takeover (Aon)

Issue No. 216/ 19 February 2008 of The Employee Benefits Monitor

In this issue of The Employee Benefits Monitor:

Minister announces change to OAP age, means test and new retirement legislation (Page 2)

Committee meetings for 2008: Parliament of the Republic of South Africa (Page 3)

FAIS Ombud’s determinations (Page 6)

· Ombud cautions brokers against confirming insurance cover without signed authority

· Ombud finds against broker who did not inform client about vehicle tracking device

Pension Funds Adjudicator’s determinations (Page 10)

· Trustees’ and members’ duties regarding medical evidence for claims [B v Corporate Selection Retirement Fund and Bluff National Park Golf Club and Liberty Group] Limited

· “Landmark ruling concerning the payment of a disability benefit as a result of mental infirmity” – Pension Funds Adjudicator [P v Eskom Pension and Provident Fund]

· “Landmark ruling concerning fund administrator being held liable for loss suffered by a member/complainant as a consequence of the it’s failure to carry out the member’s/complainant’s instruction/directive to convert the member’s/complainant’s investment from conservative to a balanced portfolio in the fund” - Pension Funds Adjudicator [Kaniewski v Glenrand MIB Benefit Services (Pty) Ltd and Krupp Engineering Pension Fund]

Good Practices in Risk Management of Alternative Investment by Pension Funds [The International Organisation of Pension Supervisors (IOPS)] (Page 18)

Should you wish to contribute an article to The Employee Benefits Monitor or/and www.ebmonitor.co.za please contact connection@icon.co.za

Access to The Employee Benefits Monitor is fee-based and subject to the Terms and Conditions at www.ebmonitor.co.za

Healthcare news is available from our sister publication The Health Cover Monitor at www.healthcovermonitor.co.za

Editorial

Treasury describes the following as an urgent policy matter, in a media release relating to the draft Taxation Laws Amendment Bill, 2008.:

The parliamentary committee of finance meets on 5 March 2008 to be briefed. We will attend the briefing and report thereon. In the interim we provide extracts from:

· The explanatory memorandum; and

· The draft Bill.

Some other recent headlines and articles at www.ebmonitor.co.za

Specialist tribunals: Pensions surplus [FSB Information circular 25/2/2008]

The broker is not the client’s keeper, Says FAIS Ombud

Social Development MINMEC adopts programme of action

Contractual savings in the life insurance industry

Budget 2008 and Pillar 0: Issue H 127 of The E B Monitor

South African (SA) Human Rights Commission welcomes the President's announcement of equality in the provision old age grant

Both spouses must be made aware of insurance exclusions, says FAIS Deputy Ombud

Taxation Laws Amendment Bills, 2008: General Overview

Changing the means test: Government’s intentions [Extract from Budget Review]

Equalisation of retirement ages – how Manuel ducked the issue for the next generation – the sting hidden in Chapter 6

Social grants

Streamlining retirement fund registration and changing pre-retirement withdrawal defaults (extract from Annexure C of Budget documents)

Poverty reduction and social security

Budget Monitor

Issue No. 217/ 22 February 2008 of The Employee Benefits Monitor

This issue of The Employee Benefits Monitor focuses on changes announced and to be announced regarding Pillar 0 (Social assistance) of our social security system. It will become increasingly difficult to operate employee benefits without an understanding of the developments taking place elsewhere.

As the Budget Review 2008 says:

“ … initial steps in social security reform will include revision of the means tests applicable to social assistance grants, with a view to better alignment with the income tax threshold. Consideration also has to be given to the alignment and synchronization of various components of the social assistance system and contributory social insurance arrangements.”

This issue of The Employee Benefits Monitor also provides annexures which are intended to provide greater insight into the outline of changes announced before the Budget and on Budget Day.

Please bear in mind that there are in essence two documents from which Budget details are drawn (neither of which is the Budget Day speech!):

Budget Review 2008: In essence a high-level overview of the fiscal, economic and Government policy environment in which tax proposals outlined in the same document take place. (199 pages)

Estimates of National Expenditure (ENE)2008: The ENE is a collective statement of budget allocations, policy priorities and accountability information. It provides extensive information for the last three financial years, the present year and for the three years of the medium term expenditure period. It is a wonderful document for Government as many tasks and deadlines that were in previous last ENE’s and have not been achieved, are simply not mentioned. As amnesia takes effect, one can then forget about past promises such as the release of technical papers for public comment, rewrite of the Pension Funds Act, promises of a retirement fund reform tax reform discussion paper, commitment not to change tax aspects of retirement funds until social security reform plans had been finalised etc. This year’s document comprises 785 pages.

According to the Budget Review, travel and paper for the Budget amounted to 38 169kg of carbon dioxide emissions and the equivalent of 726 trees.

The next issue of The Employee Benefits Monitor looks at the fundamentals of the envisaged Pillars 1 and 2 as discussed in Chapter 6 of the Budget Review, taking into account Treasury’s summary of its December 2007 social security workshop and associated documents, as well as work done by the Actuarial Society of South Africa.

Mike Thurtell connection@icon.co.za

Contents

Changes to Pillar 0: Social assistance pillar of South Africa’s social security system (page 2)

Retirement ages
Means test:
Child grant
Increases in grants/pensions
Social assistance expenditure trends
Numbers of beneficiaries
Social insurance

Annexure 1: Equalisation of retirement ages – how Manuel ducked the issue for the next generation – the sting hidden in Chapter 6 of the Budget Review (page 4)

Annexure 2: Changing the means test: Government’s intentions [Extract from Budget Review] (page 9)

Annexure 3: Types of grants (page 10)

Annexure 4: What is a Means Test? (page 11)

Issue No. 213/ 4 February 2008 of The Employee Benefits Monitor

In this issue of The Employee Benefits Monitor:

· Preservation funds – The once-off rule and the Pension Funds Adjudicator: The latest determination of the Pension Funds Adjudicator highlights how challenging SARS’ RF1/98 has been to her office [Page 2]

· E B Monitor launches Review Papers – Investigations into basic legal positions on a series of topics [Page 11]

· Dishonesty and bad faith are not required to remove a trustee – the essential test is whether or not trust property is imperilled: A Council for Medical Schemes Appeal committee decision that retirement fund trustees should understand [Page 12]

· Over 21 000 public servants steal billions in social security! A government statement that speaks for itself [Page 13]

· International news: [Page 14]

o USA: Key retirement issues [Employee Benefits Research Institute]

o Kenya: National pensions policy to be finalised [Retirement Benefits Authority]

o Watered-down reforms preserve Italian pension inequalities [Watson Wyatt]

Recent articles at The Health Cover Monitor:

For interest’s sake w mention the titles of articles published at www.healthcovermonitor.co.za over the last week:

· Ombud finds major furniture group is exploiting the poor through money lending

· World Cancer Day

· New tetanus vaccine for children

· CMS HOSPITAL TARIFF PROCESS : CIRCULAR 2 OF 2008

· Application for an interdict to prevent tariff increases by private hospitals to medical schemes

· Enterprise Risk Management in a skills-short economy

· Keeping track of company absenteeism online - first absenteeism statistics portal in SA launched

· World Leprosy Day 31 January 2008

· Statement by the Minister of Health at the meeting with Medical Schemes

· A member does not have the right to choose what medicine she wants for a PMB

· Review of The Prescribed Minimum Benefits (PMBs) within the Medical Schemes Act - CMS Circular No. 1 of 2008 of 24/1/2008

· Medical Chronicle Apologises to Alex van den Heever and the Council for Medical Schemes

· Private hospital tariffs must not impair the right of access to healthcare

“Mini” EBM H 207B of 12 November 2007

From The Employee Benefits Monitor (“EBM”) for those in a hurry.

Please see separate issue H 207A for the complete case summaries and reviews

Complaints lodged with the Adjudicator before 13 September 2007

The Adjudicator has the discretion to consider late submission of complaints, if lodged before the commencement of the Pension Funds Amendment Act, 2007

Pisane v Ellerine Holdings Limited Staff Pension Fund [Case Ref PFA/NC/7649/2006/NVC].

Adjudicator’s jurisdiction over sectoral funds

The Adjudicator does have jurisdiction to consider complaints involving sectoral funds. These are funds established in terms of the Basic Conditions of Employment Act. They are not the same as bargaining council funds established in terms of the Labour Relations Act. A bargaining forum is not a bargaining council.

Mali v Nabielah Trading CC t/a Security Wise and Private Security Sector Provident Fund on 17 January 2007 [Case No: PFA/WE/7723/2006]

The Private Sector Security Provident Fund v Naphtronics (Pty) Ltd & another Bophuthatswana division of the High Court 971 / 05 Judgment Date 10 August 2007

Private Security Sector Provident Fund v Tyron Security CC. 1 November 2007 [Case Ref PFA/GA/15733/2007/EMD]

ABSA continues to battle with administering pension funds

Be careful how you express those costs. A tax directive fee deducted off a benefit is an unlawful deduction.

Nyandeni v ABSA Group Pension Fund PFA reference:PFA/EC/6715/2005/SG 19 October 2007

The Adjudicator may not consider complaints against the Registrar’s section 14 approval

The vehicle to challenge a decision of the Registrar of Pension Funds is the FSB Appeal Board, not the Pension Funds Adjudicator.

Steiniger v Sanlam Marketers Pension Fund PFA ref: PFA/EC/13268/07/NS 19 October 2007

Sorry, no withdrawal benefit from a RAF before age 55

Rules registered to comply with the Income Tax Act are binding. No point in lodging a complaint. If you are 39 years old then unless you die or become disabled, you have a long wait for a benefit.

PFA ref: PFA/KZN/7164/06/NS XABA v The Acacia Retirement Annuity Fund / Capital Alliance Life Limited C/O Liberty Group Limited 19 October 2007

37 years is a bit long to wait before lodging a complaint

Even though the Adjudicator may consider condoning late complaints if lodged before 13 September 2007, make an effort at convincing the Adjudicator that you have a prospect of success.

Rorich v Southern African Union Fund / Sanlam Life Insurance Limited PFA ref: PFA/WE/12440/07/LS 19 October 2007

Corporate Selection Retirement Fund takes a year to respond – and then messes up … again

Trustees need to conduct a proper investigation into the financial and other circumstances of dependants.

Solfafa v Corporate Selection Retirement Fund and Molakeng-Solfafa PFA reference: PFA/FS/6274/2005/NVC 19 October 2007

An appeal to a High Court against a determination of the Adjudicator is an appeal

Three judges in the Wits High Court overturn the judgment of a single judge in the same division. Old legal situation confirmed:

That an appeal to the High Court against a determination of the Pension Funds Adjudicator:

(a) Is not merely an application for an appeal; but

(b) Is an appeal (an appeal in the wide sense, that is, a re-hearing of, and fresh determination on the merits of the matter with or without additional evidence or information); and

(c) The High Court which has jurisdiction to hear the appeal is the same High Court in which a determination of the Adjudicator is filed.

Joint Municipal Pension Fund v Maree Case Reference: A 5003 / 07 Date of Judgment: 7 August 2007

Joint Municipal Pension Fund v Martinus Case Reference: 3926 / 05, which was heard by Judge Snyders of the Witwatersrand Local Division of the High Court, with the judgment delivered on 1 December 2005.

Maree v Joint Municipal Pension Fund and Ekurhuleni Metropolitan Council (Kempton Park Municipality) in Case No: PFA/KZN/1544/04/KM

Adjudicator may not rule on validity of rules, but Court may conduct PAJA review

A dispute over the validity of a rule amendment is not a “complaint” and therefore:

(a) the Adjudicator does not have jurisdiction to declare such rule amendment invalid and therefore

(b) the Adjudicator may not order the Registrar of Pension Funds to cancel registration of such rule amendment

(c) the High Court may not consider an appeal against such a ‘determination”, even though it may consider appeals in the wide sense, as this is not an appeal against a determination.

The Court may however conduct a review in terms of the Promotion of Administrative Justice Act.

A benefit is an established benefit even though an entitlement to payment may not yet have arisen. A rule prohibiting reduction of an established benefit therefore invalidates a rule amendment reducing such an established benefit.

“But in planning for the eventuality of retirement or death or medical disability or retrenchment a member will, when planning, naturally take account of the value of the benefits that by that time have accumulated and be payable should one of the events occur immediately. The important point is that a benefit is calculable not only when it becomes claimable on occurrence of the relevant event. Its accumulated value at an earlier time is also calculable.”

Joint Municipal Pension Fund v Grobler (Supreme Court of Appeal)

Metropolitan and NUMSA Investment Company (Pty) Ltd ("NIC") to create joint venture (“Union Money”)

The Competition Tribunal has issued a Merger Clearance Certificate approving the merger between Metropolitan Holdings Ltd ("Metropolitan") and HTG Life Ltd ("HTG") unconditionally. [Case Ref: 58 / LM / Jun07: Judgment Date 5 September 2007]

In their specific markets for assistance policies and life policies the combined market shares are 5% for assistance business and 6% for life business.

Competition Tribunal approves sale by Joint Municipal Pension Fund to Johannesburg Municipal Pension Fund ("JMPF")

The JMPF held a 35% non-controlling interest in two target properties (in Port Elizabeth) which were jointly owned by it and four other shareholders. It wished to increase its interest to 54.6% by acquiring an additional 19.6% from Joint Municipal Pension Fund which had a 35% stake in the properties.

The affected properties are: Erf 2860 Newton Park Township, known as the Bridge Mall, and Erf 2878 Mount Road Township, known as the Shoprite Mall, all situated in Port Elizabeth.

Johannesburg Municipal Pension Fund / Erf 2860 Newton Park Township & another 74 / LM / Jul07 10 September 2007

____________________________________________________________________

Transfers of going concerns: High Court reaffirms Telkom principle

The High Court has reaffirmed that when there is a transfer of a going concern in the context of s197 of the Labour Relations Act, the current employee-employer relationship ceases and the fund’s rules determine what benefits are payable on that termination of service.

Independent Municipal & Allied Trade Union & Others v Cape Joint Retirement Fund & Others [6 September 2007 Case Ref: 5241/04 Davis J in Cape High Court]

Recovery of management costs from a benefit/contributions

This determination highlights the difficulties that arise when rules are not clearly drafted. Recovering costs from contributions can be problematical when there are paid-up members, so a change in practice from reducing fund yield (to recover costs) to recovering costs from contributions needs to be thought through and catered for by the rules. Creative alternatives for situations such as paid-up members must be authorised by the rules

Former paid-up members in Investment Solutions might be entitled to improved benefits.

Norton v Investment Solution Pension Fund Case NO: PFA/WE/5270/2005

2 November 2007

Issue No. 207/ 12 November 2007 of The Employee Benefits Monitor

This is a lengthy issue of The Employee Benefits Monitor, reviewing a number of recent judgments and Adjudicator’s determinations.

A separate issue of The E B Monitor has been published (“Mini EBM H 207B”) which provides very short summaries.

In this issue:

· Complaints lodged with the Adjudicator before 13 September 2007 [Page 2]

· Adjudicator’s jurisdiction over sectoral funds [Page 2]

· ABSA continues to battle with administering pension funds [Page 5]

· The Adjudicator may not consider complaints against the Registrar’s section 14 approval [Page 6]

· Sorry, no withdrawal benefit from a RAF before age 55 [Page 7]

· 37 years is a bit long to wait before lodging a complaint [Page 7]

· Corporate Selection Retirement Fund takes a year to respond – and then messes up … again [Page 7]

· An appeal to a High Court against a determination of the Adjudicator is an appeal [Page 8]

· Adjudicator may not rule on validity of rules, but Court may conduct PAJA review [Page 13]

· Metropolitan and NUMSA Investment Company (Pty) Ltd ("NIC") to create joint venture (“Union Money”) [Page 18]

· Competition Tribunal approves sale by Joint Municipal Pension Fund to Johannesburg Municipal Pension Fund ("JMPF") [Page 19]

· Transfers of going concerns: High Court reaffirms Telkom principle [Page 20]

· Recovery of management costs [Page 25]

Issue No. 202/ 19 September 2007 of The Employee Benefits Monitor

Department of Social Development will be lead department for social security …

The Department of Social Development intends, as the lead Department, to co-ordinate the following strategic objectives:

· income-smoothing for retirement

· healthcare, which should cover explicit and comprehensive minimum benefits

· death and disability cover (survivor benefits)

· insurance against accidents and diseases occurring in, or in relation to, the workplace

· indemnity insurance in respect of healthcare, against the costs of road accidents

· unemployment insurance, including coverage, in respect of maternity

· Access to independent semi-judicial adjudication processes to enforce the rights of beneficiaries

In this issue we provide an extract from the Department’s Strategic Plan Update 2007-2010, which deals with the Department’s social security programme, including its social security “Outline.”

· Issue H 173 provided The Department of Social Development’s plan for social security, from its document “Department of Social Development Strategic Plan 2006-2009/10”, which has now been updated as noted above.

· Issue H198 covers “Reform of Retirement Provisions” – An overview of the Department of Social Development’s September 2007 paper

· Issue H 201 covers a similarly titled paper of the Department, which refers to it as a June 2006 Report, but which was published in March 2007.

Issue No. 200/ 13 September 2007 of The Employee Benefits Monitor

Draft Revenue Laws Amendment Bill, 2007

The draft Revenue Laws Amendment Bill, 2007, has been published for comment. This legislation, together with the Taxation Laws Amendment Act, 2007 (already promulgated on 8 August 2007) give effect to the tax proposals presented by the Minister of Finance in the 2007 National Budget as tabled in Parliament on 21 February 2007.

The National Treasury is scheduled to brief Parliament’s Portfolio Committee on Finance on the draft legislation on 18 September, 2007. Parliament will through its own processes request public comments on the draft Bill, and thereafter hold public hearings in October 2007. Whilst all comments should be submitted to Parliament’s Portfolio Committee of Finance, members of the public are also invited to send the same comments to the National Treasury and the South African Revenue Service directly, preferably before 8 October 2007 (and hence before the hearings), to:

Pearl Malumane: or Adele Collins

pearl.malumane@treasury.gov.za acollins@sars.gov.za

National Treasury will consider all such comments submitted to it, SARS and to the Portfolio Committee of Finance, as well as any recommendations arising from the Parliamentary hearings, when finalising the legislation for tabling in Parliament in mid-October 2007, for formal consideration and adoption by Parliament.

In this issue of The Employee Benefits Monitor we provide extracts from the draft Bill and explanatory memorandum, relating to employee benefits and related issues (e.g. fringe benefits).

Please bear in mind that:

(a) A reference to a clause is reference to the Bill, while a reference to a section is a reference to the exiting legislation; and

(b) Where we quote an extract of the Bill (e.g. a clause or subclause) [Words in bold type in square brackets indicate omissions from existing enactments] while Words underlined with a solid line indicate proposed insertions in existing legislation.

(c) Where we have provided text of the current Income Tax Act without the [] or underlining, it is from www.acts.co.za and subject to the Disclaimer published at that site.

Contents

· Lump sums: Maintenance orders and housing loan guarantee payments (Page 2)

· Occupational death benefits (P3)

· Fringe benefits (P3)

· Employers’ medical assistance (P5)

· Fringe benefits: Double taxation (P7)

· Pension funds: Exemption from proposed Securities Transfer Tax (P7)

· Value of “B” in taxable income (P9)

· Employer/associated institution jointly and separately liable for gains withholding tax (P9)

· “Tax Relief For Co-Operative Banks (P11)

· “Long-Term Insurers And Controlled Foreign Companies (“Cfcs”) (P12)

· Media Statement 11 September 2007 (P11)

· Co-Operative Banks Bill 2007: Address to The National Assembly by The Honourable Minister of Finance, Trevor A Manuel, MP (P14)

Issue No. 199/ 14 September 2007 of The Employee Benefits Monitor

Editorial

This issue of The E B Monitor provides unedited articles from presentations/talks to The Institute of Retirement Funds 2007 Annual Conference.

Other recent issues:

· Issue H200 deals with the Draft Revenue Laws Amendment Bill, 2007.

· Issue H198 covers “Reform of Retirement Provisions” – An overview of the Department of Social Development’s September 2007 paper

· Issue H 201 covers a similarly titled paper of the Department, which refers to it as a June 2006 Report, but which was published in March 2007.

Contents

· Urgent legislation on the cards to protect minors - Giselle Gould of Fairheads Umbrella Trust Company (Page 1)

· Labour's position on the role of retirement funds in society - Address by COSATU General Secretary, Zwelinzima Vavi, to the Institute of Retirement Funds Conference, International Convention Centre, Cape Town, (P3)

· Speech by The Deputy Minister for Social Development, Dr Jean Swanson-Jacobs (Page 7)

· Address by the Pension Funds Adjudicator (Page 12)

Issue No. 198/ 10 July 2007 of The Employee Benefits Monitor

Editorial

Reform of Retirement Provisions – An overview of the Department of Social Development’s September 2007 paper

You’re heading for even bigger problems when an organisation’s byline is: “Building a caring society. Together”.

You know that you’re facing an even problem when the Minister of Social Development in his foreward to the Report says that:

“At the end of June 2006 the Department of Social Development distributed a discussion document, entitled Reform of Retirement Provisions, which was the first ever strategic review of the weaknesses in our system of retirement provisions.”

So it came to pass that the Department of Social Development has released a document entitled:

“Reform of Retirement Provisions

Feasibility Studies

September 2007”

The feasibility studies are for:

· A Universal Basic Pension

· Benefit Design Options

· Accreditation Framework

· Post Retirement Medical Contributions.

At least the Department of Social Development is aware that the World Bank refined its approach to 5 pillars. The Department of Social Development has even recommended a zero pillar, one of the bank’s 5 pillars.

In this issue we provide the Minister’s foreward, the introduction; and then the executive summary.

(Issue H 174 of The E B Monitor provides an overview of different conceptual approaches to social security, which may be of interest to the newcomer or those not fascinated by the social exclusionary Chilean model)

Issue No. 194/ 31 July 2007 of The Employee Benefits Monitor

Judgments, rulings and determinations

· No s14 transfer without surplus apportionment – Prefhold Group Pension Fund and Another v Sithole NO and Others [High Court (Transvaal Provincial Division)] Page 2

· Outsourcing of pensions: Another example of problems Mnguni v Abbott Laboratories, Old Mutual and Glenrand MIB (Pension Funds Adjudicator) Page 5

· Death benefits: Disputes over facts, the Plascon-Evans test and s37C’s overriding of the common law - Makume v Cape Joint Retirement Fund & another [(High Court (Cape)] Page 9

Annexure: Extracts from four judgments which discuss the Plascon-Evans test/rule Page 13

PF 130

· The Principal Officer and the recently published PF 130 – By Hendry Dul of Independent Trustee Services Page 15

International Organisation of Pension Supervisors (IOPS) and South Africa

· IOPS releases new working papers on effective pension supervision Page 18

· OECD and IOPS invite public comment on draft guidelines on the licensing of pension entities Page 19

· The FSB steams ahead with its trustee and member education programmes …. – Extracts from IOPS Working Paper No. 2 Page 19

Recent headlines published at The Health Cover Monitor’s site www.healthcovermonitor.co.za P24

Issue No. 192/ 19 July 2007 of The Employee Benefits Monitor

As Treasury and the FSB try to catch up with the private sector’s forgotten and lost knowledge of social security; we thought that in addition to our new series on African countries (see Issue H 191 on Kenya), a bulletin on recent international developments and opinions might be useful.

In this issue …

Europe

· Aging and demographic change in European societies: Main trends and alternative policy options Author: Rainer Muenz

OECD

· Pensions at a Glance - Public policies across Europe: OECD 2007

United States

· Global 1500: A Captive Insight 2007 by Aon

· Experts Anticipate More U.S. Pension System Changes by EBRI (Employee Benefits Research Institute)

· Survey Shows Employers Continuing to Cut “Traditional” Pension Plans, But Often Add to 401(k) Benefits As Well (EBRI)

United Kingdom

· Regulation tops a list of pension scheme concerns according to an online survey carried out by the National Association of Pension Funds (NAPF)

· Governance survey reveals increase in trustee training (Pensions Regulator)

· Pensions Regulator welcomes statement on mortality

· Actuarial Profession highlights uncertainty in future mortality projections (Faculty and Institute of Actuaries statement)

· Review of mortality assumptions in actuarial calculations (Board for Actuarial Standards statement)

Issue No. 191/ 10 July 2007 of The Employee Benefits Monitor

South Africans interact increasingly with the rest of Africa. Roles vary and often occur in more than one capacity: As employees, employers, providers of services and products and tourists. Allied to these private initiatives are ANC aspirations for a more unified economic and political African entity; increasing SADC–integrated policy initiatives and South Africa’s current physical hosting of Africa’s parliament.

For those involved in private and public healthcare, employee benefits and social security in South Africa, there is therefore an increasing need for at least a basic insight into healthcare and other benefits provisions in other countries.

In this issue we provide an overview of private and state healthcare, retirement and social security in Kenya. We hope that this provides an insight into the benefits provisions in that country.

Feedback is welcome and depending on your response, we will attempt (foolhardy?) to provide similar overviews of other African countries.

Thank you for your continued interest in The Employee Benefits Monitor.

Contents …

Healthcare (Page 2)

· Overview: Health coverage

· About the Hospital Insurance Fund

· Presidential rejection of National Health Insurance legislation

· Private medical insurance

National Social Security Fund (Page 4)

· Summary

· Benefits

Retirement schemes (Page 6)

· Overview

· The Retirement Benefits Act And The Regulations: Key Compliance Requirements (Presentation by Tom Kiptanui, Compliance Officer, Retirement Benefits Authority)

· A Presentation on Registration and Taxation of Retirement Benefits Schemes by Kenyan Revenue Authority

· Budget Speech changes: Retirement Benefits Authority’s notice to the retirement benefits industry

Issue No. 187/ 9 June 2007 of The Employee Benefits Monitor

Editorial

This issue of The Employee Benefits Monitors focuses on the issue of transfers between Retirement Annuity funds, as discussed at the Parliamentary Committee of Finance (PCOF) hearings about the Pension Funds Amendment Bill, 2007 [B11 – 2007]. Other aspects of the Bill are covered in separate issues of The Employee Benefits Monitor.

Contents

· Summary [Page 2]

· Treasury does an about face (Wednesday 6 June 2007) [Page 2]

· The new subsection 7 to s14 of The Pension Funds Act, 1956 (once the revised Bill has been signed into law) [Page 3]

· The old proposed subsection 7 submitted to PCOF (Pension Funds Amendment Bill, B11 – 2007) [Page 3]

· “Non-member spouse” [Page 3]

· Treasury’s rejection of concerns on Friday 1 June 2007 before doing a complete u-turn on Wednesday 6 June 2007 [Page 6]

- A. Extract from Treasury’s “Summary of comments on the Pension Funds Amendment Bill, 2007”

- B. Treasury’s Response to comments on Section 14(7): Transfers Between Retirement Annuity Funds [Friday 1 June 2007]

· June 2007 LOA SUBMISSION TO PCOF [Page 13]

· Extract from undated valid but old LOA submission to PCOF (Not discussed) [Page 16]

· Extract from submission of Business Parliamentary Office representing BUSA and CHAMSA [Page 18]

· Submission by ACI and LISPA [Page 18]

- 18 April 2007: “JOINT ACI/LISPA COMMENT ON THE LOA SUBMISSION ON THE PENSION FUNDS AMENDMENT BILL, 2007, IN PARTICULAR, SECTION 14(9) THEREOF.

· Presentation by LISPA [Tuesday 29 May 2007] [Page 20]

Issue No. 185B/ 1 June 2007 of The Employee Benefits Monitor

Pension Funds Amendment Bill, 2007

Bargaining Council’s inclusion in the Pension Funds Act: Is FSB’s/Treasury’s one paragraph amendment enough or another fine mess?

The Pension Funds Amendment Bill, 2007 is enjoying the National Assembly Committee of Finance’s attention (or at least the attention of some members). This issue of The Employee Benefits Monitor focuses on the first two days’ meetings (29 and 30 May 2007) and only on the issue of the inclusion of bargaining council funds under the Pension Funds Act. Separate articles deal with presentations, submissions and deliberations of other aspects of the Bill. It has been updated with Treasury’s feedback provided to the National Assembly Committee on Finance on 1 June 2007 (First item in list of contents immediately below)

The contents are structured as follows:

· Extract from National Treasury’s “Summary of comments on The Pension Funds Amendment Bill, 2007” of 1 June 2007 in response to submissions made to the National Assembly Portfolio Committee on Finance. [Page 2]

· Background: All retirement funds to be subject to one Retirement Funds Act, but bargaining council funds sooner rather than later. [Page 7]

· Presentation by National Treasury (29 May 2007) [Page 8]

· Presentation by the Furniture Bargaining Council [Page 12]

- Introduction

- Our notes of the Council’s presentation/talk

- Council’s written submission

- Committee questions and answers

- Comments by E B Monitor

· A few reasons why you might not wish to be a member of the Furniture Bargaining Council’s funds [Page 19]

· Other submissions regarding Bargaining Council funds [Page 20]

- Extract from written submission by Pierre Reineck of the Employee Benefits Studio [Submission marked PF-6 [2007] by the committee clerk]

- Extracts from Financial Planning Institute’s March 2007 written submission

Issue No. 185/ 30 May 2007 of The Employee Benefits Monitor

Pension Funds Amendment Bill, 2007

Bargaining Council’s inclusion in the Pension Funds Act: Is FSB’s/Treasury’s one paragraph amendment enough or another fine mess?

The contents are structured as follows:

· Background: All retirement funds to be subject to one Retirement Funds Act, but bargaining council funds sooner rather than later. [Page 2]

· Presentation by National Treasury (29 May 2007) [Page 3]

· Presentation by the Furniture Bargaining Council [Page 7]

- Introduction

- Our notes of the Council’s presentation/talk

- Council’s written submission

- Committee questions and answers

- Comments by E B Monitor

· A few reasons why you might not wish to be a member of the Furniture Bargaining Council’s funds [Page 14]

· Other submissions regarding Bargaining Council funds [Page 14]

- Extract from written submission by Pierre Reineck of the Employee Benefits Studio [Submission marked PF-6 [2007] by the committee clerk]

- Extracts from Financial Planning Institute’s March 2007 written submission

Issue No. 184/ 15 April 2007 of The Employee Benefits Monitor

In this issue we provide a few case studies by the Ombudsman for Long-term Insurance. Although they deal with insurance, the principles are important beyond registered long-term insurance.

The first article addresses the question: Is an intermediary –whether agent or broker – legally obliged to provide advice?

Many advisors like to be recognised positively for providing advice (i.e. being paid) by having a regulatory system in place that pays them according to pre-determined methods of calculation. However, once that system is in place determined efforts are made to ensure that other than being paid, there are no negative legal consequences. One tactic is to claim to furnish information e.g. options available to a client, and then leaving it to the client to make a decision. In this way the intermediary thinks that he/she – because advice isn’t being given - won’t be responsible for any consequences, with an eye on FAIS.

The unsaid assumption is that in all such cases there is no duty to provide advice. This is not necessarily a safe assumption to make, as the Ombudsman for Long-term Insurance indicates in the following discussion, where he addresses the question: “When is there a duty on an intermediary to furnish advice, either on his own initiative or if invited to do so?”

As he says in his introduction:

”Advice, seriously given, be it gratuitous or for reward, must always be appropriate. But is an intermediary, who holds himself out to be a professional financial adviser, whether he is an independent broker or is associated with a particular insurer, legally obliged to tender advice to his customer? That question surfaced in a trio of recent cases, discussed below.”

The second article deals with an equally tricky question: An insurer advises the insured that he was covered for a stent, but the advice was incorrect as the policy didn’t cover it? Must the insurer pay or can it rely on the policy wording?

The third article deals with another area where insurers try to repudiate claims: Is an insurer liable for a claim if it provides cover despite an omission in an application form?

Issue No. 182/ 23 April 2007 of The Employee Benefits Monitor

About this issue ….

In Issue H 181 we discussed the Ombudsman for Long-term Insurance’s latest Annual Report (2006) and provided his Rules and various Practice Notes.

In this issue we provide the case summaries/reports that he provided in the Annual Report.

Issue No. 181/ 20 April 2007 of The Employee Benefits Monitor

A special issue of The Employee Benefits Monitor focusing on the Ombudsman for Long-term Insurance Annual Report for 2006, launched on 18 April 2007. Please see our separate issue H 182 for the Ombudsman’s case reports/summaries.

· Ombudsman’s press release plus our commentary (Page 2)

· Rules applicable to Ombudsman for Long-term Insurance (Page 11)

· Ombudsman’s Practice Notes (Page17)

· Criteria for marking a case as complicated for charging purposes

· Re-opening of closed files

· Criteria for marking a case incompetent for charging purposes

· A practice note on late submissions of claims

· Request by an insurer for additional information from an insured

Issue No. 178/ 31 March 2007 of The Employee Benefits Monitor

National Treasury says it must still be decided who will administer the national social security fund. The Minister of Social Development, his deputy minister and the South African Social Security Agency (SASSA) say that “in pursuance of a standing decision of Cabinet, the Social Security Agency will be restructured accordingly to ensure appropriate governance and capacity to deliver social insurance benefits.” The social insurance reforms, says the Minister, include the retirement system.

This issue of The Employee Benefits Monitor provides extracts from recent speeches and SASSA’s strategic plan, so as to provide insights into the SASSA.

Background: National Treasury’s “Social Security And Retirement Reform - Second Discussion Paper” of 23 February 2007 promised that “Further details on associated reforms of the retirement fund industry will be the subject of technical papers to be released during March 2007.” Given Treasury’s failure to meet its own previous deadlines; its confusion over whether its project dealt with a rewrite of the Pension Funds Act or pensions reform; and the sudden jump to social security reform, there were not many expectations that we would see these technical papers within the promised timeframe. March 2007 has come and gone …

Treasury’s February 2007 discussion paper indicated that the issues of administration and fund management regarding the second pillar - the national social security fund – was still up for discussion. [The second pillar comprising compulsory contributions out of earnings, for retirement and risk benefits, with retirement funding being on an individual account basis earning “a pooled common rate of return on savings”]

The February 2007 paper said:

“Administration and fund management

74. Social security administration and fund management functions are undertaken as government agency responsibilities, in most countries. However, some countries have adopted private sector management arrangements and competitive provision of services, subject to specification and regulation of product design and cost structures. These and other design options will be the subject of research and consultation during 2007.”

However, it seems that the Minister of Social Development is not leaving this issue open to discussion, saying in his 28 March 2007 Budget speech that in terms of “a standing decision of Cabinet, the Social Security Agency will be restructured accordingly to ensure appropriate governance and capacity to deliver social insurance benefits.” Just in case the Minister is right, we present this issue of The Employee Benefits Monitor.

Presumably this “vision” (our term) would imply that SARS will be left with the role of collector of South Africa’s fifth payroll tax. In addition to the old/current 4 payroll taxes – PAYE; Skills development levies: unemployment insurance and Regional Services Levies – it would be responsible for collecting contributions to the national social security fund.

However, as we noted in our summary of the then Unemployment Insurance Contributions Bill in Employee Benefits Monitor Issue H53 of 14 February 2002, SARS said that it was then able to collect contributions from those PAYE or skills development levy registered, but not those outside this net. UIF contribution collection was therefore to be split between SARS and the UIF Commissioner. Given this problem, it will be interesting to see how contribution collection for the national social security fund will be organised.

Regarding collection costs, we noted the following in Issue H 53:

“Clause 16 Collection costs

SARS will be entitled to an admin fee of the greater of 1,5% of collections or actual costs, if higher. 1,5% is similar to what SARS receives for collecting the Skills Development levy on behalf of the Department of Labour. According to Mr Louw, 1,5 % is SARS' average collection cost for each of the 4 major taxes (VAT, PAYE, Company tax and Excise taxes), so it is a relatively low rate for the smaller unemployment insurance revenue.”

It will be interesting to know what the Minister of Health thinks of Treasury’s paper mooting the idea that national social health insurance might be wedged into Manuel’s model.

Mike Thurtell

Editor

connection@icon.co.za

Contents:

· Need to set up government Sponsored Retirement Fund – BuaNews Page 3

· Social security extract from 28 March 2007 Budget speech of Minister of Social Development Page 4

· Extract from 28 March 2007 Budget Vote speech by Deputy Minister of Social Development Page 7

· Extracts from SASSA’s (The South African Social Security Agency) strategic plan 2007/08 – 2009/10 Page 8

o Extract from the foreward

o Overview of the SASSA by its CEO

o SASSA’s macro social security policy reform and context

o SASSA’s Organisational Environment and Context

· SASSA v provincial roles and responsibilities … a view from one of the provinces Page 15

· A profile of state old age pensions - Extract from A profile of social security beneficiaries in South Africa, June 2006, a report by Datadesk of the Stellenbosch University’s Department of Sociology and Social Anthropology; commissioned by the Department of Social Development. Page 16

Issue No. 174/ 1 March 2007 of The Employee Benefits Monitor

In February 2007 Treasury released its second discussion paper on retirement funds. If implemented, employee benefits practitioners will need to understand clearly – and for the first time – how their benefit arrangements fit into the wider social security context.

In this issue of The Employee Benefits Monitor we provide a range of extracts of documents, so as to help your staff develop an understanding of the various ideas of social security flying around. In particular, we had trainers in mind, to save their time in having to look for background material. More senior staff may wish to take a more cursory/quick look/scan.

The next issue (H 175) provides a summary of the second discussion paper.

Other issues of The E B Monitor that help provide background material include:

· Issue H171 of 16 February 2007 provides pre-Budget Day teasers of social security

· H 172 of 21 February 2007: Budget review documents setting out the social security vision

· H 173 of 22 February 2007 provides the Department of Social Development's plan for social security (“Programme 3”), from its document “Department of Social Development Strategic Plan 2006/7 – 2009/10”.

· H 107 of 24 November 2004 Speeches and summit documents relating to Nedlac retirement conference (October 2004).

· H110 of 10 February 2005 provides a summary of National Treasury's discussion paper entitled: "Retirement Fund Reform: a discussion paper" December 2004.

· H61 of 7 May 2002 is a special issue summarising Taylor Committee's recommendations on Retirement and Insurance.

These are all available from the “Previous issues …” section of www.ebmonitor.co.za ]

Mike Thurtell

Editor

connection@icon.co.za

Contents

South Africa

· Four pillars for South Africa ? [February 2007] (Page 3)

· Three pillars: Treasury’s 2004 discussion paper (Page 4)

· From two pillars to three …. [2004 and 2007] (Page 4)

· The 2002 Taylor Committee’s framework [2002] (Page 5)

· Two pillars: Though the lens of Cosatu [2000] (Page 7)

· South Africa’s 4 pillars [1997] (Page 7)

· Towards a two pillars system [1997] (Page 7)

An American perspective on Traditional Sources of Economic Security and the transition from welfare assistance to social security (Page 8)

· Traditional Sources of Economic Security

· The Rise of Formal Systems of Economic Security

· The English "Poor Laws"

· Economic Security in America

· Old Age in Colonial America

· The "New" Alternative

· The Social Insurance Movement

· The Threshold of Change

The World Bank and its pillars (Page 12)

· A Framework for Pension Reform (Five pillars)

· World Bank press release about multipillar proposals released 2004 and then again in 2005 (Five pillars)

· The World Bank’s three pillars (1994)

· New ideas about social security: The World Bank revisits its three pillars (1999 and 2001)

· Myths implicit in the World Bank model

Other frameworks for and ideas about social security (Page 24)

· The Geneva Association’s four pillars

· Prudential Financial’s four pillars

· The AARP’s (American Association of Retired Persons) four pillars

· A UK actuary’s view

· Kenya: The Four Pillars of Indigenous Social Security

· Not the World Bank approaches … (Comments by ISSA - International Social Security Association - author)

· Not entirely happy with the pillars …. The Stockholm Initiative

Issue No. 173/ 22 February 2007 of The Employee Benefits Monitor

In issue H 172 of The Employee Benefits Monitor we noted that the Budget Day documents indicated that the Department of Social Development is responsible for reform of second pillar contributory schemes for retirement provisions and has also presented its paper to cabinet.

We have asked the Department for a copy of the paper presented to Cabinet.

In the meantime, we have extracted high-level ideas of the Department’s plan for social security (“Programme 3”), from its document “Department of Social Development Strategic Plan 2006/7 – 2009/10”.

Should our copied extracts not be sufficiently legible, the plan is available from the Department’s website www.socdev.gov.za or e-mail connection@icon.co.za and we’ll e-mail the document to you (This will be quicker than downloading from their site).

Mike Thurtell

Issue No. 172/ 21 February 2007 of The Employee Benefits Monitor

Contents

This issue focuses on social security and retirement highlights of the Budget Day documentation.

Other than the highlights section, the rest of this issue provides quotations, to enable the reader to access unedited source material.

We have tried to select these extracts in a short space of time (3 hours) and apologise in advance for poor layout, but hope that the content is useful.

Our highlights/selected extracts [Page 2]

From the Budget Speech …[Page 5]

From 2007 Estimates of National Expenditure [Page 7]

What National Treasury wants to do (page 7)
What the Department of Social Development wants to do (page 7)

From the Budget Review [Page 8]

Issue No. 171/ 16 February 2007 of The Employee Benefits Monitor

Contents

FSB news [Page 2]

Pension Funds: Electronic submission of 2005 returns: FSB Information Circular 2 (9 February 2007)

Dismissal for incapacity: Illness or injury [Page 2]

We continue our series of articles on dismissal for incapacity, with the following:

Article 2: Fairness of dismissal: Probability v 50:50 test (Page 2)

Article 3: The role of insurance in dismissals due to incapacity (illness or injury) (Page 6)

Case summaries of Ombudsman for Long-term Insurance [Page 11]

When is death caused by an accident?

News from the LOA [Page 13]

Greater access to appropriate life products now a reality for low income earners

Social security teasers …. [Page 16]

Don’t know your World Bank’s 3 pillars from its 5 pillars from Government’s 3 pillars? We provide extracts of pre-Budget Day (21/2/2007) speeches and briefings, in a (vain?) attempt to understand what is going on.

· What the President told Parliament …. (Page 16)

· What the President told SABC 2 … (Page 17)

· What the Minister of Social Development, Dr Zola Skweyiya, told Parliament … (Page 19)

· Social Sector Cluster briefing document for media briefing … (Page 23)

· Social Cluster 2 Media Briefing Parliament, Cape Town … (Page 27)

· Don’t know your 3 pillars from your 5 pillars ? Comprehensive Social Security Speaking Notes by Minister Skweyiya (Page 29)

Issue No. 170/ 5 February 2007 of The Employee Benefits Monitor

This is the first in a series of articles on Dismissal for incapacity arising from ill health or injury. Our focus is on gaining practical insights from CCMA awards and Labour Court judgments, rather than textbooks.

The emphasis is on gaining a practical insight into how the CCMA and Labour Courts approach this topic, through our employee benefits “lens”.

This issue of the Employee Benefits Monitor focuses on:

· Understanding fair reason and fair procedure regarding incapacity

· Fairness of dismissal: Probability v 50:50 test

· The role of insurance

The next few issues in this series look at:

· The importance of identifying whether or not an injury is work-related

· Does employment terminate with Permanent disability pensions?

· When does the employment relationship terminate? [Oops! 10 years' overpayment of "disability" payments]

· Hybrid cases

· Non-hybrid cases which looked hybrid

-----------------------

Issue No. 169/ 30 January 2007 of The Employee Benefits Monitor

Ever since former Pension Funds Adjudicator Murphy – when he was a CCMA Commissioner – misunderstood the difference between benefits and remuneration, it has been a subject of dispute brought before CCMA Commissioners. In this issue of The Employee Benefits Monitor we review a few of these disputes.

This issue also provides some of the more noteworthy news articles published at www.ebmonitor.co.za since Issue H 168 of 9 January 2007.

Contents:

· Draft Governance PF Circular 130 for final comment (Page 2)

· Retirement Fund Practice Notes: Addendum C to RF 1/98 funds for the preservation of the retirement interests of employees (Page 2)

· Case summaries of Labour cases (Page 3)

o A company vehicle: Tool of trade v Benefit? (P3)

o Is a vehicle allowance a benefit or remuneration? (P4)

o Benefits v remuneration: Is an alleged right to referring a dispute to private arbitration a benefit ? (P6)

o Benefits v Remuneration: Ex gratia payment is not a “benefit” (P12)

· Life industry waives war exclusions for peacekeepers (P17)

· News headlines at The Health Cover Monitor in January 2007 (P18)

[Articles on Fidentia, SARS’statement on tax structuring and the FAIS Ombud’s views on human rights and ethics are at www.ebmonitor.co.za ]

Issue No. 168/ 9 January 2007 of The Employee Benefits Monitor

Contents ….

Case summaries of determinations of the Pension Funds Adjudicator:

· Expenses: Another dodgy decision by the Adjudicator?

· Pension Funds Act overrides registered rules: Minimum benefits don’t depend on registration of rule amendment – Adjudicator

· ABSA and the Adjudicator battle with s37D? [We have asked ABSA for comments and will include their response if received]

· S37C: Distribution of death benefits – A bizarre “thorough and proper investigation”

· Azania Security and Security Employees National Provident Fund escape the radar …again

Case summaries of The Ombudsman for Long-term Insurance

· Retirement funding in South Africa: Provident fund benefit paid to RA and then into HR manager’s personal bank account

· Annuity – purchased with no escalation option - complainant queries nonescalation of monthly income – complainant alleges he was not a party to the agreement

· Annuity – time for determination of the amount: at time of death or claim? – procedure – rule 3.4.1

· Causation - exclusion – benefits not payable during “sickness attributable to pregnancy” – whether infection by a bacterium most probably introduced during procedures related to pregnancy is a basis for reliance on the particular exclusion?

· Waiting period – payment - funeral policy - failure to pay premium - lapsing of policy - fresh waiting period

International snippets

· New Report from EBRI: Rollovers Fuel Growth as Individual retirement account (IRA) Assets Hit Record $3.67 Trillion

· The Political Future of Social Security in Aging Societies

· The $7 Trillion Question: How Do Employers Spend that Amount on Worker Wages, Salaries, and Benefits?

· Pension Plan Sponsors Changing Investment Focus, Watson Wyatt Finds

Issue No. 167/ 30 December 2006 of The Employee Benefits Monitor

Contents ….

Announcements from the Financial Services Board [Page 2]

· FSB’s retirement funds division gets OECD status

· Common Cents curatorship extended

· Scharring settlement offer

· Enforcement Committee fines Scharring and Holland R750 000

· Update on Licences for Financial Services

Announcements from the Life Offices’ Association [Page 6]

· Enhanced RA fund and endowment values a reality as from December

· LOA announces new Board for 2007

From the Ombudsman for Long-term Insurance [Page 9]

· Ombudsman for Long-term Insurance issues Practice Note: Interest on late payments

· Case summaries by The Ombudsman for Long-term Insurance

o Delay - late submission of claim – equity jurisdiction – funeral insurance

o Dread disease benefit claim – insurer refused claim, as condition did not qualify, but was only prepared to offer more life cover at substantially higher rates

o Disability - Disability cover at an advanced age

Contents (continued) …

Case summaries of determinations of The Pension Funds Adjudicator [Page 14]

· A complaint 15 years too late and a Constitution which isn’t retrospective

· Funds may not deny liability based on separate, non-fund insurance arrangements

· Another disillusioned retirement fund member …

· Expenses: Another member thought his employer contributed to his retirement

Issue No. 166/ 22 December 2006 of The Employee Benefits Monitor

Contents ….

Minimum values

· Requirements for minimum values where contractual changes are made to savings policies [FSB Information letter 3/2006 (LT) of 21 December 2006] Page 2

· Commission: Draft amendments to the regulations under the Long-term Insurance Act, 1998, Act 52 of 1998 Page 4

· Amended Regulation 30 to The Pension Funds Act, 1956 Page 4

· Enhanced RA fund and endowment values a reality as from December [Media Release The Life Offices’ Association (LOA) 22 November 2006] Page 8

· Momentum set to honour Statement of Intent on Life Policies Page 10

Service Level Commitments by the Registrars of Long-term and Short-term Insurance [FSB Information Letter 2/2006 (LT & ST) issued 20 December 2006: Effective Date 1 January 2007] Page 10

Tighter regulation of savings schemes and stokvels Page 12

Metropolitan consortium secures major new retirement fund administration contracts Page 17

Issue No. 164/ 6 December 2006 of The Employee Benefits Monitor

Editorial …

The Pension Funds Adjudicator has recently published 60 determinations on his site. The bulk loading is due to a technical problem on his site.

In this issue we summarise some of those recent determinations by the Pension Funds Adjudicator.

These case summaries will be added to the more than 800 case summaries available in www.ebmonitor.co.za

Many case summaries are short because the Adjudicator is publishing his short determinations, for reasons probably only known to him.

Short determinations however do not mean that the issues are as straightforward as the Adjudicator thinks, as the case dealing with housing loans shows, on page 10.

Issue No. 163/ 30 November 2006 of The Employee Benefits Monitor

Editorial …

In this issue we review recent determinations by the Pension Funds Adjudicator, including:

Grant Thornton caught with its fingers in the cookie jar […] – another case of an employer unlawfully deducting contributions off salary and keeping this secret from the fund

The case of the unfulfilled pension promise – An employer fails to act on its promise; and the Adjudicator has little to say. [Young v Maister and Telkom]

If a cheque says non-transferable, is it right to assume that the payee received his money? [A v Bakers Biscuit]

S18 and schemes of arrangement to make a fund financially sound – the Adjudicator battles to understand the law – Old Mutual flouts the law [C v SALA Pension Fund]

Wishful thinking – surely I’m entitled to something [Msutu v Golden Arrow]

I deserve a pension, so give me one [B v NGK]

Something rotten in the state of Denmark – An interesting case of University of Durban Westville running a funded “benefit fund” paying permanent disability pensions, with the employer paying generous ill health gratuities on termination of service, yet these non-employees retaining contributory membership of their retirement fund. [Vadivelu v University of Durban Westville]

Death benefits – delays in distribution [Vonger v Mineworkers and Mazibuko v Longefurn]

Issue No. 163B/ 30 November 2006 of The Employee Benefits Monitor

Note: This is an amended version of Issue H 163 as it now includes Grant Thornton’s complaints and our response

Editorial …

In this issue we review recent determinations by the Pension Funds Adjudicator, including:

We didn’t deduct the contributions off salary – the Adjudicator got in wrong. We didn’t participate but will now “appeal” to the High Court. – Grant Thornton [Wright v Grant Thornton]

The case of the unfulfilled pension promise – An employer fails to act on its promise; and the Adjudicator has little to say. [Young v Maister and Telkom]

If a cheque says non-transferable, is it right to assume that the payee received his money? [A v Bakers Biscuit]

S18 and schemes of arrangement to make a fund financially sound – the Adjudicator battles to understand the law – Old Mutual flouts the law [C v SALA Pension Fund]

Wishful thinking – surely I’m entitled to something [Msutu v Golden Arrow]

I deserve a pension, so give me one [B v NGK]

Death benefits – delays in distribution [Vonger v Mineworkers and Mazibuko v Longefurn]

Issue No. 163B/ 30 November 2006 of The Employee Benefits Monitor

Note: This is an amended version of Issue H 163 as it now includes Grant Thornton’s complaints and our response

Issue No. 163/ 30 November 2006 of The Employee Benefits Monitor

Contents:

From the FAIS Ombud [Page 1]

Ombud refuses Leaderguard scam broker leave to appeal (P2)
Leaderguard scam: FAIS Ombud punishes another broker (P2)

Legal Services Charter – Two perspectives [Page 5]

“Legal Services Charter: Process was flawed” (P5)
Opening address by Ms Brigitte Mabandla, MP, Minister for Justice and Constitutional Development at the Legal Services Charter Indaba in Sandton (P6)

The Age of Majority: Has it been reduced to 18 years? May you boot your teenager out of the house yet? [Page 7]

Pension Funds Adjudicator: our case summaries

· How booze gets you into trouble …. [Gula v Impala Platinum Limited and Impala Workers Provident Fund] (P11)

· Time Barring and Prescription (P18)

· Another absurd case before the Adjudicator – 20 years after the event [or was it really absurd?] Buso v Van Leer (P19)

· Another unhappy member (P22) [Coetsee v Walter Roux and Associates Group Pension Fund and Walter Roux and Associates]

· The insignificance of being a member - Member doesn’t want his money with Alexander Forbes (P23) [Cele v Gomma Gomma and Alexander Forbes]

· Surely I'm entitled to something? (P24) [Maqekeza v Southern Sun Retirement Fund and Tsogo Sun Holdings (Pty) Limited]

· Can't think of anyone else - give me some money (P25) [Van Der Westhuizen v Afrox Pension Fund]

Issue No. 162/ 29 November 2006 of The Employee Benefits Monitor

Editorial …

This issue of The Employee Benefits Monitor provides news articles from November 2006 at www.ebmonitor.co.za . However, for the convenience of readers, case summaries of determinations by the Pension Funds Adjudicator and High Court, have been provided in separate issues.

In this issue ….

· Report by the Directorate of Market Abuse (Page 1)

· FSB loses patience with pension fund trustees (Page 3)

· SADEC must block cross border financial fraud – FAIS Ombud (Page 4)

· Indices must not misrepresent social reality (Page 5)

· New social grants plan cautiously welcomed (Page 7)

· New social grants plan cautiously welcomed (Page 8)

· Intestate Succession Act's discrimination against same sex partnerships unconstitutional (Page 10)

· The nominated beneficiary predeceasing the life insured (Page 12) – Ombud for Long-term Insurance

· A disputed beneficiary nomination (Page 13) Ombud for Long-term Insurance

· Doctors need patient consent if charging over NHRPL (Page 17)

· Gym and bioscope don’t help Discovery health (Page 17)

· Life industry to launch funeral insurance with added protection (Page 18)

Issue No. 161/ 15 November 2006 of The Employee Benefits Monitor

Editorial …

In this issue ….

· Withholding of pension benefits – High Court spells out what must be proved [Page 2]

· Municipal Gratuity Fund loses its challenge in High Court – another disability decision gone astray [Page 11]

· Ombud orders car salesman who sold motor warranty policy to take the blame for unclear policy wording [FAIS Ombud] [Page 14]

· Broker who negligently fails to transfer cover ordered to pay client [FAIS Ombud] [Page 16]

· Determinations of The Pension Funds Adjudicator: [Page 17]

· “Important ruling concerning the rights of pensioners and pension increases”

· SARS' rules are binding if included in rules

· The rules are king: Well sort of ….sometimes …

· Fund liquidations: May the Adjudicator consider complaints before a fund is placed in liquidation?

Issue No. 156/ 31 August 2006 of The Employee Benefits Monitor

Editorial …

Trustees, employers and retirement funds: Who owes whom what duties, when and why?

Pity the person who does try to find out what the respective rights and duties of trustees, employers and members are.

In this issue we provide four articles published at ebmonitor.co.za during August 2006. Each has its own perspective and each was written separately. However, as they all touch on a similar theme, we thought that it would be appropriate to provide them in the same issue of The Employee Benefits Monitor.

Our previous issue H 155 of The Employee Benefits Monitor illustrates inconsistencies over what is expected of trustees when their rules allow trustees to enhance or provide benefits on a discretionary basis. And that’s only when reviewing determinations of the Pension Funds Adjudicator!

The articles in this issue are:

Trustee accountability and responsibility: Pension Funds Adjudicator: Address to the Institute of Retirement Funds Annual Conference 2006 [Durban International Convention Centre 22 August 2006] Page 2

Does the board of a fund owe a fiduciary duty to the members? By Graham Damant of Bowman Gillfillan Page 5

The relationship between employers and pension funds: By Chris Todd of Bowman Gilfillan Inc Page 8

The rights of pension fund members: Address to ACI (Association of Collective Investments) convention – 3 August 2006 [By Naleem Jeram – deputy Pension Funds Adjudicator]

Issue No. 152/ 16 August 2006 of The Employee Benefits Monitor

“Disability cases are not for amateurs”

It’s a pity that so few employee benefits practitioners will have read the Ombudsman for Long-term Insurance’s article having the above title, or his case summaries.

Little surprise then, that so few funds and employers challenge insurers’ claims decisions.

Yet, a large slice of those decisions must be incorrect. Writing in his 2005 annual report, the Ombudsman for Long-term Insurance expressed concern over a trend starting in 2004, “a trend developed which continued this year: the number of complaints in respect of claims that were declined increased markedly and this is now our highest category of complaints.”

Simply because ignorant, insured lay persons who don’t understand insurance like to gripe?

No, the Ombudsman notes that “The fact that the W/P percentage (“wholly or partially in favour of the complainant”) has increased substantially in this category (from 36% to 43%) is a vindication for complainants complaining to our office.” The 2005 report shows that 29% of disability complaints and 46% of health policy complaints were decided wholly or partially in favour of the complainant. In our opinion, quite a high success rate for complaints primarily brought by lay persons.

With the trend towards insurers assessing disability claims on pseudo-medical rather than medico-legal grounds, often overriding contractual and other legal provisions, with current fads like “managing disability”, one would have thought that there was ample opportunity for challenging insurers’ decisions.

In this issue of The Employee Benefits Monitor we update our previous case summary of the Pension Funds Adjudicator’s Van der Linde v Telkom Retirement Fund determination.

The intention is not simply to provide an update. We hope that the overview highlights some of the many disability issues raised (some unintentionally by the players). As we note, the issue of discretion is in itself inconsistently applied by the Pension Funds Adjudicator; and a future issue will review this in greater depth.

If you have any insights, send your article or comments to connection@icon.co.za

Issue No. 151/ 4 August 2006 of The Employee Benefits Monitor

Section 37A: The attachment or reduction of pension benefits [Page 2]

News about the FSB [Page 3]

· Section 14 applications involving retirement annuity funds and preservation funds

· FSB issues draft circular 126: Funds consisting only of unclaimed benefits or funds without a properly constituted board of trustees

· Significant progress made in processing of fsp licence applications

The DA about the Transnet funds and social grants fraud [Page 4]

· DA welcomes outsourcing of Transnet’s Pension Funds

· Social Grant Fraud: 1 792 civil servants owe R11 million

With a straight face – the ANC talks about faith, corruption, skullduggery and ethics [Page 6]

· Need to restore faith to auditing profession hit be scandal – Trevor Manuel

The impact of South Africa’s social pensions on poverty and development [Page 9]

Case summaries of determinations of the Pension Funds Adjudicator [Page 10]

· He paid nothing - but wanted more [Cetywayo v Otter Tapes CC Provident Fund]

· Cape Joint trustees not doing their duty [X v Cape Joint, Metropolitan and Oudtshoorn Municipality]

· Another case of contribution deductions in the security industry [Msimanga v Canine Security (Pty) Ltd / Security Employees National Provident Fund]

· Another case of contribution deductions in the security industry [Tembe v Security Employees National Provident Fund & AZA Day & Night Security]

· Adjudicator rejects members' complaints against Grinaker [Heath (on behalf of 12 members) v Grinaker]

· Ruling concerning the application of a rule amendment [Meiring v Bel-Essex Provident Fund]

Issue No. 150/ 17 July 2006 of The Employee Benefits Monitor

Complaints before The Public Protector

Complaint against the South African Local Authorities Pension Fund (SALAP) – Page 2
Complaint against the Transnet Second Defined Benefit Fund – Page 2

Bulking and other secret profits – more summaries

Glenrand earned R2,3m from bulking P5
Secret profits: Fedusa will accept nothing less than full accountability Page 13

FSB-specific

New financial statements for retirement funds – Page 16
FSB further reduces fsp licence applications – Page 16
Surplus: Correction to Board Notice 18: Assumptions for the determination of minimum reserves – Page 20
Extension of underwritten fund's 2006 returns – Page 21
Levies on financial institutions 2005/6 – Page 21

Complaints before the Ombudsman for Long-term Insurance

Disability - Notification of claim – claimant’s knowledge of cause of claim is prerequisite - Page 21
Abusive behaviour doesn’t get you far with the Ombudsman for Long-term – Page 22

Issue No. 149/ 26 June 2006 of The Employee Benefits Monitor

Interpretation of contract - High Court sets aside Adjudicator's determination: No foundation in law for Adjudicator to set aside employer's good faith opinion - So Mr Manuel, where were you as trustee? - Sole GEPF Trustee Trevor and how he looked after members - How Trevor's GEPF (Trevor at one time a sole trustee) tried to shaft a beneficiary out of interest on a benefit unpaid for 9 years - Secret profits – summaries of presentations made to parliamentary committee of finance in June 2006 - Nothing wrong with bulking - AF will continue bulking – issue is non-disclosure – Alexander Forbes - Retirement Funds Industry: Secret profits, silent theft? - Each fund must operate its own bank account – ABSA - Fast-tracking of urgent issues on cards - Treasury - 90% of bulking/secret profits presentations to parliamentary committee of finance was misinformation – deputy Registrar of Pension Funds - Incoming deputy registrar announces “way forward” - Income Tax Act requires bulking of taxes due – Old Mutual - FSB revokes pension administrator - Commutation of small annuities – SARS increases annuity factor from 12.5 to 14 [Addendum to GN 16] - SAMWU reject attempt to undermine retirement fund benefits

Issue H 148 of The E B Monitor (14 June 2006)

In this issue:

- Transfer from a defined benefit to a defined contribution fund: Does it constitute change to conditions of employment? [By Francisco Khoza (Senior Associate, Bowman Gilfillan Inc.)]

- Unilateral change to terms and conditions of employment [By Poso Mogale. From CCMAil: April 2006 Issue 26 May 2006]

- Can post-traumatic stress disorder be an occupational injury?

- "Waterfront Property Sale - DA concerned for Transnet pensioners' welfare"

- FSB’s refusal to licence Opportune overturned

- 'Single pension fund: DA to lay charges against SALGA'

- Replacement of Policies, Advancement of Retirement Age and Investment Returns

- Smooth bonus funds [Three articles: Smoothed Bonus Funds and their Practices Explained: By the LOA; Old Mutual comments on Smoothed Bonus products and third, BONUS PRODUCT UNDER SCRUTINY – Mungal v Protektor Preservation Fund and Old Mutual

- Leaderguard forex scam: FAIS Ombud blasts broker

Issue H 147 of The E B Monitor:

This issue comprises case summaries of three problematical disability cases. The third is of particular interest as it deals with the interpretation of fund and policy rules, one of the many topics which the Adjudicator seems to find challenging.

2.1 Capital Alliance fails in attempt to impose non-existent disability assessment policy condition after payment – The High Court has rejected Capital Alliance's attempt to reclaim a permanent and total disability benefit it had paid after it had assessed the claimant's disability and agreed that he was disabled. Capital Alliance argued that the claimant was obliged to disclose that after a year of being discharged from employment, he was in employment, and that employment at any stage would disallow the benefit.

2.2 An occupation involves more than window-dressing/fronting – Capital Alliance loses another disability case - An occupation ("beroep") involves both a regular activity and earning an income, the High Court has held. In the context of the dispute over the cessation of a monthly disability benefit in Capital Alliance Life Bpk v Reynecke, the Court held that an occupation involves a craft, trade, profession or other means of earning a living" [In Afrikaans, "beroep" is used in the context of "nering, broodwinning"].

2.3 High Court sets aside Adjudicator’s determination – Adjudicator’s order has “no foundation in law” –

The High Court has decided that the Pension Funds Adjudicator’s:

(a) setting aside of an employer’s decision regarding the health status of a member; and

(b) ordering the fund to pay a pension (instead of the lesser withdrawal benefit)

“had no foundation in law”.

Here the Court noted that the rules were as a result of an agreement between employees and employer and had to be interpreted taking into account the terms and conditions of employment. Our case summary provides additional notes on a recent Pretoria Tax Court case as well as a Supreme Court of Appeal judgment.

Issue H 146 of The E B Monitor

- Board of Appeal to be reviewed

- FSB says be wary when buying funeral policies

- FSB appoints Deputy Executive officers

- Funds respond to FSB bulking probe

- Treasury to embark on special pension awareness campaign

- "Retirement fund reform" (Rewrite of Pension Funds Act?) fizzles into 2008 and beyond

- FAIS Ombud’s determinations

- Ombud Dismisses Complaint By Woman Alleging That Old Mutual Had Failed To Advise Her Husband To Buy Adequate Life Cover

- FAIS Ombud blames broker for trucker’s rejected claim

- Court cases: Defined benefits promised by rules independent of financial soundness of fund – High Court

- Pension Funds Adjudicator’s determinations [ABT v NEDCOR BC Final determination]

- Surveys [Retirement Fund Survey highlights investment performance as critical issues ]

4. The Health Cover Monitor (www.healthcovermonitor.co.za)

Issue H 145 of 25 April 2006:

This issue comprises disability case summaries from the latest Annual Report of the Ombudsman for Long-term Insurance; as well as a discussion of the Pension Funds Adjudicator's views and case law on the topic of "Section 14 Transfers – To whom may members complain?"

Issue H 144 of 15 April 2005:

This issue provides a selection of news articles published at www.ebmonitor.co.za Included is one in a series of our commentaries on topics/views published by the Pension Funds Adjudicator in his latest Annual Report.

The articles are:

1. Minimum individual reserves for defined benefit members

2. Increase in social grants

3. Fees [Revision of friendly societies' prescribed fees - Determination of fees payable to Registrar of Financial Services Providers - Fees payable in terms of Securities Services Act ]

4.News from and about the Pension Funds Adjudicator [Adjudicator reclaims constitutional jurisdiction]

5. Long-term Insurance [Ombudsman For Long-Term Insurance issues 2005 Annual Report – with a few pointed remarks - LOA Launches Financial Consumer Education For Government Employees - Life insurers up income and benefit payments in 2005]

6. Section 197: a blow for second generation contractors

7. Are your independent contractors having their cake and eating it too?

Issue H 143 of 20 March 2005

1. Pension Funds Adjudicator: Recent determinations and comments on his Annual Report [An employment-related pensions dispute isn't always allowed to be considered by the Pension Funds Adjudicator - Adjudicator claims jurisdiction over life insurance companies … maybe - Adjudicator rules against member - Adjudicator clarifies his jurisdiction over voluntary liquidations]

2. Life companies get shareholder approval for minimum values

3. From the Tax Courts [The death of living annuities?](The Tax Court rejects the idea that living annuities are annuities)

Issue H 142 of 10 March 2005

This issue of The Employee Benefits Monitor focuses on an important Tax Court judgment regarding the determination of when retirement accrual takes place; and the where the Court rejects SARS' General Notes as having any legal effect as they are nothing but Practice Notes.

Introduction: Accrual of a retirement benefit is determined in terms of registered rules – not SARS' General Note; nor the term "retire" in the Second Schedule; nor an administrator's IRP5 – Tax Court

Contents …

1. Introduction [Page 1]

2. SARS' briefing note [Page 1]

3. Lessons from the judgment [Page 4]

4. Source material:

4.1 SARS' letter explaining role of General Notes (17 February 1995)

4.2 "GN 11/95 (20 July 1995) Retirement from employment

4.3 Extracts from the Income Tax Act, 1962 (Act 58 of 1962)

Issue H 141 of 10 March 2005

Contents …

1. Pension Funds Adjudicator: Overview of recent determinations and selected topics from his latest Annual Report

1.1 The Adjudicator clarifies his jurisdiction over surplus apportionment

1.2 Non-registered rules don't count - Adjudicator

1.3 Adjudicator has no jurisdiction over any bargaining council fund - Adjudicator

1.4 "Landmark" ruling for school employees (Not really landmark, but that was what the Adjudicator coined it)

2. From the Financial Services Board

2.1 PF Circular 125: Use Of Employer Surplus To Prevent Job Losses

2.2 Extension For 2005 Financial Statements, Reports And Statistics

2.3 FSB says you may be owed unclaimed pension benefits

3. Rumbling and mumbling

3.1 Government Should Not Restrict Pension Payouts

3.2 Retirement funds must heed the call of socially responsible investments

4. Nichol v Registrar of Pension Funds – another perspective

5. LOA "S References" Five Financial Advisers In January 2006

Issue No. 101/ 26 May 2004 of The Employee Benefits Monitor

In this issue...

Corruption Act

• Anti-corruption Act gazetted (Page 2)

• Amendments to Medical Schemes Act and Financial Services Board Act (Page 4)

Court orders

• Independent trustees appointed for Joint Municipal Pension Fund (Page 5)

• Court rules on Rentmeester, Assupol dispute (Page 6)

FAIS

• “Register now for FAIS licence” - FSB (Page 7)

• Lists of compliance officers available (page 7)

Health Cover

• Prescribed Minimum Benefits to include anti-retroviral therapy (Page 7)

• CMS urges Department of Health to amend medicine pricing regulations (Page 8)

• Clarification on medicine discounting (Page 9)

• Medicines pricing regulations gazetted (Page 9)

• Health dept extends medicine dispensing license Act deadline (Page 12)

• CMS publishes draft undesirable business practice declaration (Page 12)

• CMS issues Circulars 11 and 12 (Page 13)

• Appeals to the Council for Medical Schemes and Appeal Board established in terms of the Medical

Schemes Act (Page 13)

Retirement funds

• Income tax - New tax directives for retirement funds (Page 13)

• Pensions surplus – Chief Actuary issues information

(Page 14) circular (Minimum Benefits ILG and EY Rates)

• Fund liquidations (Page 16)

Issue No. 142/ 10 March 2006 of The Employee Benefits Monitor

This issue of The Employee Benefits Monitor focuses on an important Tax Court judgment regarding the determination of when accrual takes place.

Contents …

3. Introduction [Page 1]

4. SARS' briefing note [Page 1]

3. Lessons from the judgment [Page 4]

5. Source material:

4.1 SARS' letter explaining role of General Notes (17 February 1995) [Page 6]

4.2 "GN 11/95 (20 July 1995) Retirement from employment [Page 6]

4.3 Extracts from the Income Tax Act, 1962 (Act 58 of 1962) [Page 7]

Extract:

“1. Introduction: Accrual of a retirement benefit is determined in terms of registered rules – not SARS' General Note; nor the term "retire" in the Second Schedule; nor an administrator's IRP5 – Tax Court

In a dispute brought before the Tax Court as to whether a provident fund member's lump sum accrued in 2001 (last day of employment 28 February 2001) or 2002, the Tax Court held that the benefit accrued in the 2001 year of assessment. The reasoning of the case is significant for retirement fund practitioners.

The Court held that determining when accrual of a lump sum takes place, must be determined in terms of the rules; and not SARS' General Note 11 or trying to apply the term "retire" from the Second Schedule or a fund administrator's interpretation of the law by way of its IRP 5.”

Issue H 138 of 25 January 2006:

1.1 Financial Advisory and Intermediary Services Act

· Broker Who Submitted Forged Signatures Could Face Disbarring

· Termination of broker's authorization

1.2 Request for submissions: Privacy and Data Protection Draft Legislation

1.3 Disputes before the CCMA and Labour Courts

· Employee Identification- Parol evidence

· Unfair labour practice - Benefits - Use of car for business purposes not benefit as contemplated by LRA

· Non-payment of bonus - Employer did not pay applicant long service bonus as per company policy

· Fair dismissal even if employee's assault of another is outside workplace

1.4 Disputes before the Ombudsman for Long-term Insurance

· The assessment of disability is a legal process rather than a medical one

· Investment instruction not carried out - monies invested in second hand endowment policy - loss of capital

· Disability claim - whether complainant could perform the material and substantial duties of his regular job

· Pensioner offered option to purchase an annuity from insurance company - query concerning the commencement date

· Exclusion clause - the case of the battery acid ….

· Insurer agrees that evidence might support claimant's claim

· Compensation for late payment of death benefits caused by unjustified delay by an insurer

1.5 Social security

· Only eligible persons will receive social assistance

· Asbestos victims to be compensated soon

· President Mbeki was wrong to sign RAF legislation into law

1.6 News about healthcare: titles of recent articles published by The Health Cover Monitor at www.healthcovermonitor.co.za

Issue H 137 of 4 January 2006

This issue of The Employee Benefits Monitor ("E B Monitor") comprises News Headlines published at www.ebmonitor.co.za during December 2005, except for:

(a) Articles relating to the LOA-Minister of Finance agreement on insurance policy pricing, which have been published in Employee Benefits Monitor H136 of 16 December 2005; and

(b) The Constitutional Court judgment on same-sex partnerships, which is covered by E B Monitor H 135 of 1 December 2005

Contents of E B Monitor H 137 of 4 January 2006:

2.1 FAIS

· FAIS licensing nearly complete

2.2 Rewrite of Pension Funds Act confused as retirement fund reform

· Treasury on Retirement Fund Reform discussion paper comments

2.3 Schedule L fees

· "Correction" to gazetted Schedule L fees

· Pension Funds: Revised service level agreement

2.4 Complaints brought before the Ombudsman for Long-term Insurance

· Pensioner's R400 000 investment reduces to R319 661 over ten years – and then agent advises transfer to equity fund

· Misselling – can insurer be held liable on the basis that the policy should never have been issued?

2.5 Jurisdiction of Pension Funds Act v Labour Relations Act

· Court orders that Labour Relations Act – not Pension Funds Act – applies to EIPF and MIPF – R9billion surplus at stake

2.6 FSB Disputes – win some, lose some

· FSB wins case against asset manager [FSB media release]

· FSB loses its application for curatorship of Fedbond

· FSB no longer on IOPS Executive Committee

2.7 Consumer Price Index (CPI) - Headline November 2005

Issue No. 111/ 15 March 2005 of The Employee Benefits Monitor

1. Rewrite of Pension Funds Act – Jonathan Dixon (Page 2)

2. Report from the Adjudicator (Page 3)

3. Report from the Regulator (Page 5)

4. Curatorships and liquidations – Nicola Howard (Page 7)

5. Section 197 transfer and pension benefits – Chris Todd (Page 8)

6. Three perspectives on proposals for retirement fund reform (Page 10)

· 6.1 Business – Mike Jackson

· 6.2 Labour – Jan Mahlangu

· 6.3 Financial Sector Campaign – Dr Blade Nzimande

7. Service providers - Rosemary Hunter (Page 12)

8. Governance – Jonathan Mort (Page 13)

9. The way forward – Jeremy Andrew (Page 16)

Issue No. 103/ 30 June 2004 of The Employee Benefits Monitor

In this issue...

√FAIS

√FSB fisaco over PIC Bill

√Court order: Fedbond

√FSB reiterates support for INPRS’ 15

Principles

√Financial Intelligence Act: Deferments

√Minister tries to clarify future of State-owned

Enterprises (SOE’s)

√Road Accident Fund announcements

New credit laws to be developed

Issue No. 101/ 26 May 2004 of The Employee Benefits Monitor

In this issue...

Corruption Act

• Anti-corruption Act gazetted (Page 2)

• Amendments to Medical Schemes Act and Financial Services Board Act (Page 4)

Court orders

• Independent trustees appointed for Joint Municipal Pension Fund (Page 5)

• Court rules on Rentmeester, Assupol dispute (Page

FAIS

• “Register now for FAIS licence” - FSB (Page 7)

• Lists of compliance officers available (page 7)

Health Cover

• Prescribed Minimum Benefits to include anti-retroviral therapy (Page 7)

• CMS urges Department of Health to amend medicine pricing regulations (Page 8)

• Clarification on medicine discounting (Page 9)

• Medicines pricing regulations gazetted (Page 9)

• Health dept extends medicine dispensing license Act deadline (Page 12)

• CMS publishes draft undesirable business practice declaration (Page 12)

• CMS issues Circulars 11 and 12 (Page 13)

• Appeals to the Council for Medical Schemes and Appeal Board established in terms of the Medical

Schemes Act (Page 13)

Retirement funds

• Income tax - New tax directives for retirement funds (Page 13)

• Pensions surplus – Chief Actuary issues information (Page 14) circular (Minimum Benefits ILG and EY Rates)

Issue No. 43/ 31 August 2001 of The Employee Benefits Monitor

ITEM

Page

FSB Report on 2001 Legislative Programme

Labour Legislation

Cabinet approves changes to LRA and BCEA

World Bank Report

Pension Reform Becoming Global Issue

Surplus Bill and Regulations

Overview of Bill

Overview of Draft Regulations

PCOF Deliberations

Promotion of Access to Information Act, 2 of 2000: Draft Regulations

Issue No. 42/ 17 August 2001 of The Employee Benefits Monitor

Recent Adjudicator Determinations (by subject)

Adjudicator's Office

Jurisdiction - Definition of Fund

Roos v OVS Nywerhede Pensioenfonds & Another (Preliminary & Final Determinations)

Death Benefits

Beneficiary Nomination Form: Error

Zulu v Illovo Sugar Provident Fund

Dependency - Parents

Trustee Duties to Trace Beneficiaries

Zikhali v Metal Industries Provident Fund

Distribution

Robinson v Central Retirement Annuity Fund & Another (Final Determination)

Deductions off benefits

Permissible Deductions

Le Roux v Child Welfare Provident Fund (Final Determination)

Disclosure

Members' Right to Information

Moat v Standard Bank Group Retirement Fund

Employer Discretion

Factors to consider in enhancing benefits

Fourie v Orion Fixed Benefit Pension Fund (SA) & Another (Preliminary Determination)

Preservation Funds

Once-off Withdrawal

Steele v Foschini Group Retirement Fund & Another (Interim Ruling and Final Determination)

Withdrawal Benefits

Dismissal: Unfair Benefits

Manzini v Metro Group Retirement Fund

Retrenchment - Payment of Benefit

Seymour v Clinic Holdings Executive Retirement Fund

Issue No. 40/ 20 July 2001 of The Employee Benefits Monitor

ITEM

Page

Increases in social grants

Nominee Companies - Correction

FSB Requirements for investment managers and linked investment services providers

Medical Schemes Amendment Bill 2001 - Replies from the Registrar

Levies on financial institutions

Human rights

Surplus Bill

Occupational Health and Safety (OHS) Turnaround Strategy 2001 – 2004

Structure and functioning of the courts

United Nations Declaration of Commitment on HIV/AIDS

Draft Revenue Laws Amendment Bill

Issue No. 39/ 13 July 2001 of The Employee Benefits Monitor

ITEM

Page

Recent Appeal Court Decisions

Mostert N.O. v Old Mutual Life Assurance Co (SA) Ltd

· Pension Fund Investments;

· Insurer's contractual obligations

Associated Institutions Pension Fund v Le Roux & Others

· Actuarial Valuations - Nature of Actuarial Function

Recent Adjudicator Determinations (by subject)

Adjudicator's Office

Jurisdiction - Cause of Action

Mojahi & Others v Gauteng Building Industrial Retirement Fund & Another

Jurisdiction - Prescription of Complaint

Epol Pension Fund v Premier Retirement Fund

Death Benefits

Beneficiary Nomination Form

Karam v Amrel Provident Fund

Distribution- Factors to consider

Magwaza v BB Cereals Provident Fund (Preliminary Determination)

Tracing Beneficiaries

CALA Dairies CC v orion Money Purchase Provident Fund & Another (Preliminary Determinations)

Deductions off benefits

Permissible Deductions

Le Roux v Child Welfare Provident Fund (Preliminary Determination)

Withholding of Benefit

Twigg v Orion Money Purchase Pension Fund & Another (Final Determination)

Disclosure

Extent of Duty

Provan v Liberty Life Association of Africa Limited & Another (Preliminary Determination)

Membership

"Fake" Temporary Employment Contracts

Leak v Commercial Union of South Africa Staff Pension Fund & Another

Retirement Benefits

Investment of Benefit pending Payment

Le Roux v Sanlam Retirement Fund (Final Determination)

Surplus

Transfer - Section 14

Whelan & Others v Babcock Africa Pension Fund & Another (Preliminary Determination)

Adjudicator Case References

Issue No. 35/ 24 May 2001 of The Employee Benefits Monitor

Topic Monitor

Joint IRF/PLA Workshop on Distribution of Death Benefits

Draft Circular on Fidelity and Negligence Insurance for Retirement Funds

FSB Information Circular 1/2001: Submission of Financial Statements

Financial Institutions (Protection of Funds) Bill, 2001

Financial Advisory and Intermediary Services Bill, 2001

41^st Annual Report of the Registrar of Pension Funds

Adjudicator Determinations (by subject, including snapshot summaries)

Administrator's Duty of Care and Diligence

De Ruiter v Bosal Afrika Pension Funds & Others

Death Benefits

Apportionment - factors to consider

Kipling v Unilever SA Pension Fund & Another (Final Determination)

Dependency - Customary Law Wife

Mwelase v Randcoal Provident Fund

Dependency - de facto dependant

Govender v Alpha Group Employees Provident Fund & Another (Final Determination)

Disability

Calculation of Benefit/Interest on Late Payment

Kruger v IMATU Retirement Fund

Waiting Period

Erasmus v Johannesburg Chamber of Commerce and Industry Pension Fund & Others (Final Determination)

Disclosure

Misstatement re Benefit Options on Fund Conversion

Lewis v First National Bank Group Pension Fund (Final Determination)

Divorce

Tax on Pension Interest

Rhode v University of the Western Cape Provident Fund & Another (Preliminary Determination)

Employer Discretion

Duty of Good Faith

Isaacs v SAMA Pension Fund & Another

Preservation Funds

Restriction on Once-off Withdrawal

· Moran v De Beers Pension Fund (Final Determination)

· Sablay & Others v FNB Pension Fund & Another (Preliminary Determination)

· Sablay & Others v FNB Pension Fund & Another (Final Determination)

· Zeman v Sanlam Life Assurance Ltd & Others (Final Determination)

Withdrawal Benefits

Preservation Options on Withdrawal

Maepa v Sanlam Retirement Fund (Office Staff)

Case References

Issue No. 33/ 30 April 2001 of The Employee Benefits Monitor

Recent Adjudicator Determinations (by subject)

Adjudicator's Office

Jurisdiction: Constitutionality of fund rules

Till v Unilever SA Pension Fund (Final Determination)

Jurisdiction: Submission of Complaint; Prescription of Complaint

Greyling v OZZ Pension Fund (Final Determination

Powers of Investigation

Sekele v The Orion Money Purchase Pension Fund & Another (Final Determination)

Death Benefits

Dependency - Parent

Wasserman v Central Retirement Annuity Fund (Preliminary Determination)

Apportionment: Factors to consider; Deductions: Funeral expenses

Kipling v Unilever SA Pension Fund

Disability Benefits

Pre-existing condition

Tshehla N.O. v Iscor Pension Fund

Disclosure

Misstatement

Koch v Fedsure Life Assurance Limited & Another

Discrimination

Same Sex Partnership; Constitutionality of Fund Rules

Till v Unilever SA Pension Fund

Membership

Compulsory

Sekele v The Orion Money Purchase Pension Fund & Another (Preliminary Determination)

Compulsory

Gafane v The Orion Money Purchase Pension Fund & Another

Withdrawal Benefits

Calculation of Benefit; Binding force of Rules

Moran v De Beers Pension Fund (Preliminary Determination)

Retrenchment Benefit

Moroe & 9 Others v AECI Employees Pension Fund & Others (Final Determination)