Almost seven years after lawmakers approved changes to the National Pensions Act, Cabinet has approved a new commencement order to bring into force part of those reforms.
However, the changes, which will now enhance the courts’ ability to impose higher fines and possibly imprisonment for employers on summary conviction, will be implemented on a phased basis, according to the Department of Labour and Pensions.
Deputy Premier and Minister for Border Control and Labour Chris Saunders, through the statement, said the commencement of the sections of the National Pensions (Amendment) Act 2016 are “long overdue”.
“It’s important that pension providers educate their members on the pension plans they are entered into and for employers to remain in compliance with the regulations that guide them. The National Pensions Act was enacted for the benefit of employees and these changes were made to increase transparency and members’ engagement. It is therefore important that employees take the time out to understand their Pension Plans to better plan for their future,” he said.
The new pensions law came into force on 31 Dec. 2016, with implementation of various sections staggered throughout 2017.
Increased statements
Under a phased approach for the new commencement order, the first reform, which came into effect 1 Jan. 2023, requires all pension plan administrators (PPAs) to host annual general meetings and provide members with statements on a semi-annual basis, either issued electronically or by hard copy.
“While some PPAs voluntarily provide AGMs and frequent statements, these changes are important revisions which establish an opportunity for all members to attend an annual meeting with their pension plan administrator to learn more about the plan and discuss their concerns,” the statement said.
The increase in statement frequency from annual to semi-annual, it added, will provide members with more information about the plan’s expense ratios and investment returns as well as their employer’s payment of the required monthly pension contributions.
Director of Labour and Pensions Bennard Ebanks welcomed the changes taking effect.
He said the provisions “will fortify the pension regime whereby non-compliant employers will be held more accountable, members will be provided with greater information, administrators’ responsibilities will be increased and the Department of Labour & Pensions will be strengthened.”
Non-compliance will result in stiffer penalties
Under the commencement order, from 1 March, the Department of Labour and Pensions will require a published list of all registered pension plans and their PPAs, as well as their key service providers.
“The additional information will allow the general public to have an official list of registered pension plans so they can verify that their pension plan is properly registered with the regulator,” the statement said.
It pointed out that magistrates in Summary Court have noted in open court, on several occasions, that stronger penalties were needed for employers to take offences seriously.
“From an enforcement perspective, new key provisions will be the Court’s ability to impose
higher fines and possibly, imprisonment for employers, on summary conviction.”
Delinquent employers
Effective 1 July, pension administrators will be required to inform employees of a delinquent employer within 60 days of notifying the Labour Department.
In order for the administrator to fulfil this requirement, pension plan members are encouraged to contact their PPAs to update their contact information, including email or mailing addresses, the statement said. It added that administrators will also be required to collect interest on delinquent contributions and act when an employer is delinquent, which includes contacting the employer or employees.
If it is not resolved, then the administrator will report it to the department and, after 60 days, notify the affected employees.
The administrators will also have the option of publishing the names of the employers.
“Additionally, the DLP can demand the appearance of a delinquent employer in order to address the pension arrears and will also have the authority to publish breaches under the National Pensions Act. These provisions are added to the ongoing ability to establish payment plans and prosecute employers for offenses,” the statement added.
An administrative penalty system will be introduced in October, which will create another enforcement tool for the department. At the same time, a requirement will be put in place for ongoing training for pension plan administrators.
This will mean that all new and ongoing PPAs will be required to provide the DLP with supporting evidence of their training on the management, administration and investment of the pension plan. In addition, training will be required on the National Pensions Act as well as the administrator’s fiduciary duties.
The remaining few provisions of the Amendment Act, the statement added, “are to be implemented in a phased approach, after the review of the existing National Pensions (Pension Fund Investments) Regulations”.
Any future proposals or changes will require Cabinet approval before implementation.
For more information, the public can contact 945-8960 or email [email protected].
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