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BIHL to establish Pension Fund Administration Company

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KEABETSWE NEWEL

Diversified financial services firm, Botswana Insurance Holdings Limited (BIHL) plans to form a pension fund administration company, which could rake in more money for the company, Chief Executive Officer (CEO) Catherine Lesetedi revealed

“In terms of the new Retirement Funds Act, there is now an opportunity for the Group to consider Pension Fund Administration as a new revenue stream,” she wrote in the 2018 annual report

While Botswana Life has a Retirement Annuity Fund, which it is administering in terms of its existing insurance contract, Lesetedi said the new Act suggests that there may be a need for the Retirement Annuity Fund to be administered by a separate company.

“This could form the basis for the establishment of a Pension Fund Administration company within the BIHL Group fold. No decision has yet been taken in this regard, but it is a consideration that dovetails with our new five-year strategy,” she said.

The Retirement Funds Act was effected by the Non Bank Financial Institutions Regulatory Authority (NBFIRA) in April 2017 repealing the Pension and Provident Funds Act (1987). According to NBFIRA CEO Oaitse Ramasedi, the old Act was overtaken by events and was limited in terms of the risk based regulatory approach adopted by NBFIRA in 2012. In addition, Ramasedi said the New Act has specifically included other retirement fund industry players who were not adequately covered, and that it also enhanced the governance requirements and standards of pension funds.

Under Ramasedi’s stewardship, NBFIRA facilitated for parliament to pass the new RFA on the 27th August 2014, a legislative instrument than came into operation in April 2017. In that Act, NBFIRA wants all pension funds to now operate only after being issued by the authority, a license to operate as a retirement fund, which however will be issued after the authority satisfies itself that all requirements as per the Act, have been met.

In fact, section 15 of the Act compels the board of the retirement funds to appoint and manage service providers who will perform the functions required by a licensed fund, including, an administrator who shall maintain the membership records of the licensed fund. The administrator shall also collect contributions on behalf of the licensed fund, pay benefits as well as remit any excess moneys to the investment managers where appropriate.

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