Pension Funds

When the Zimbabwean dollar was introduced in 1980, it was worth more, in the official exchange market, than the United States dollar – at Zim$1 = US$1.47. In 1983, my mother retired as a teacher, after some 22 dedicated years in the service of the then Zimbabwean Ministry of Education. Her pension was Zim$567.00. There was no inflation factor built in, and so at Zim$567.00 it stayed.

In 1983 Zimbabwe inflation was already at 19% and within 5 years my mother’s pension had halved in value. For the next decade, Zimbabwe’s inflation wildly fluctuated, but, once it broke the 100% barrier in 2001, the slippery slope had arrived. In 2004 (when she died) inflation was at 132.75% (down from 598.75% the previous year) and my mother’s pension was worth something like minus Zim$4.16. It could not be paid, even – all Zim$567.00 of it – because the smallest denomination of bank note was Zim$5 000.00.1

This all goes to show (partly) how important it is that pension funds are managed properly. And which is why we can be grateful for the Pension Funds Act 1956, because it provides, comprehensively, for the registration, incorporation, regulation and dissolution of pension funds.

The Act falls under the authority of the Minister of Finance, but our esteemed Financial Services Board sees to its implementation and the policies and protocols it provides.

A. The Adjudicator

The Pension Funds Adjudicator is like an ombudsman, to hear, determine and dispose of complaints about pension funds in a fair and expeditious manner. He has significant powers of investigation and inquiry – and his determination has the same effect as if it were a judgment of the High Court.

  1. Any person who insults the Adjudicator is guilty of an offence.2

  2. It is a crime to anticipate a determination of the Adjudicator in any manner likely or intended to influence the determination.3

  3. If anyone interrupts any proceedings conducted by the Adjudicator, or misbehaves himself in any manner in the place where the proceedings are being held, he is guilty of an offence.4

  4. Any person who, in connection with a complaint, does anything which, if done before a court of law, would have constituted contempt of court shall be guilty of an offence.5

B. Registration

  1. It is a crime to carry on the business of a pension fund, unless that fund has been registered under the Act.6

  2. It is a crime to carry on the business of a pension fund after the date on which the fund is advised by the Registrar that the application for registration has been rejected.7

  3. No person may apply to his business a name which includes the words ‘pension fund’ or any other name which is likely to indicate that that person carries on the business of a pension fund, unless such business is registered under the Act.8

  4. Every pension fund organisation must apply to the Registrar9 for registration. It is an offence to contravene or fail to comply with this provision.10

  5. Any person who, in such an application (or, for that matter, any application made in terms of the Act) makes a misleading, false or deceptive statement, or conceals any material fact, shall be guilty of an offence.11

  6. It is a crime for any registered pension fund to carry on any business other than the business of a pension fund, unless the Registrar approves.12

  7. If the Registrar does approve, he may stipulate conditions and/or a time limit for the conduct of the other business. Failure to comply with such terms and conditions is a criminal offence.13

  8. It is a crime to induce (or attempt to induce) any person to become a member of a fund which is not registered in terms of the Act.14

C. Payment of contributions and benefits

  1. It is a crime to induce (or attempt to induce) any person to contribute to a fund which is not registered in terms of the Act.15

  2. The employer of any pension fund member must pay to the fund, in full:16
    • any contribution which is to be deducted from the member’s remuneration; and
    • any contribution for which the employer, in terms of the rules of the fund, is liable,

    and the employer will be guilty of an offence if it fails to do so.

  3. Not later than 15 days after the end of the month in respect of which such payments are to be made, the employer must send to the fund such information in regard to the payments as is prescribed. It is an offence not to do so.17

  4. It is a criminal offence if any contribution to a pension fund is not forwarded directly to the fund, or transmitted directly into the fund’s bank account so that it is received within seven days after the end of the month in which it is due and payable.18 19

  5. If the contribution is forwarded directly to the fund, it is guilty of an offence if it does not deposit the contribution into its bank account by the next business day.20

  6. If a person ceases to be a member of one fund, and is admitted as a member of another fund and is entitled by its rules to transfer the benefits from the previous pension fund, that fund is guilty of a criminal offence if it does not transfer the full benefit within 60 days21 of receiving the member’s written request.22

  7. The board of a pension fund is guilty of an offence if it does not report any non-compliance with the above terms and conditions.23

D. Administration of pension funds

  1. It is a crime to administer (on behalf of a pension fund) the receipt of contributions, or the disposition of benefits, unless you have been approved by the Registrar, and unless you continuously comply with any conditions which may be prescribed.24

  2. An administrator commits an offence if he fails to:
    • endeavour to avoid conflict between his interests and the duties owed to the fund;25
    • disclose to the board any conflict of interest or potential conflict of interest, with full particulars of how such conflict will be managed;26
    • administer the fund in a responsible manner;27
    • keep proper records;28
    • employ adequately trained staff and ensure that they are properly supervised;29
    • have well-defined compliance procedures;30
    • maintain the prescribed financial resources to meet its commitments and to manage the risks to which the fund is exposed;31
    • furnish the Registrar with such information as requested by the Registrar where such request is reasonable, the purpose for the request is disclosed, and reasonable notice is given to the administrator in order to meet the request;32
    • within a reasonable time provide a fund with information (pertaining to the fund) that the administrator has in its possession or under its control as requested by the fund.33
  3. The administrator commits a criminal offence if he destroys information relating to the fund, or its members or former members, without the consent of the fund.34

  4. When an administrator becomes aware of any material matter relating to the affairs of a fund, which in his opinion may prejudice the fund or its members, the administrator must inform the Registrar of that matter in writing without undue delay, and is guilty of an offence if he fails to do so.35
  1. By November 2008 – if it is at all possible, in the circumstances, to coincide a date with a percentage – Zimbabwean inflation was running at 89 700 000 000 000 000 000 000%. Statistics from Wikipedia: ‘Zimbabwean Dollar’. (As we know, of course, the trouble with statistics is that as many as 43.2% of them can be misleading.) 

  2. Section 30V(a). 

  3. Section 30V(b). 

  4. Section 30V(c). 

  5. Section 30V(d). 

  6. Section 31(1)(b). 

  7. Section 31(1)(c). 

  8. Section 31(1)(d). 

  9. The executive officer of the Financial Services Board is the Registrar of Pension Funds. 

  10. Section 4(1). 

  11. Section 37(1A)(c). 

  12. Section 10. 

  13. Section 10. 

  14. Section 37(1A)(b). 

  15. Section 37(1A)(b). 

  16. Section 13A(1)(a) and (b). 

  17. Section 13A(2)(b). 

  18. If the fund is one whose assets are, exclusively, long-term insurance policies, the contribution(s) must be forwarded to the insurer concerned so that it receives the payment(s) not later than seven days after the end of the relevant month. 

  19. Section 13A(3)(a)(i). 

  20. Section 13A(3)(b). 

  21. Or such longer period as the Registrar may allow. 

  22. Section 13A(5). 

  23. Section 13A(10). 

  24. Section 13B(1). 

  25. Section 13B(5)(a). 

  26. Section 13B(5)(a). 

  27. Section 13(B)(5)(b). 

  28. Section 13(B)(5)(c). 

  29. Section 13(B)(5)(d). 

  30. Section 13(B)(5)(e). 

  31. Section 13(B)(5)(f). 

  32. Section 13(B)(5)(g). 

  33. Section 13(B)(5)(h). 

  34. Section 13B(7A)(b)(i). 

  35. Section 13B(10).