The main statutes governing the retirement funds industry are the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) Act, the Retirement Funds Act, the Income Tax Act and the Financial Intelligence Act.

Retirement Funds Act, 2014 (Salient Points)

Appointment and functions of Regulatory Authority

The Minister of Finance appoints the Regulatory Authority Board who then appoints a Chief Executive Officer.

Licensing of funds

The fund should be based on sound financial principles. The Regulatory Authority shall issue a Licensing Certificate and a copy of fund rules endorsed by NBFIRA.

Rules of a fund & Rule Amendments

The rules of a fund should include full details of the fund and they shall bind the fund, employer, members, and officers of the fund.

Rule amendments, which affect the rights/benefits of members, only apply to those members who join the fund after the date of such an amendment.

Dissolution & Cancellation of a registered fund

A liquidator, who is approved by the Regulatory Authority, dissolves a fund. The liquidator compiles assets and liabilities accrued to the fund. The actuary, if required, provides calculations of the benefits due to each member.

Registered Office

Every registered fund shall have an office in Botswana. Should there be any change in address or with regards to a new scheme, the Regulatory Authority should be notified within one month.of local people, where visitors can learn about the culture of the people.

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Principal Officer

Every registered fund shall have a principal officer, who shall be resident in Botswana. Any change in the principal officer should be notified to NBFIRA within 14 days.

Appointment of an auditor, actuary and administrator

Every registered fund should appoint an auditor, actuary (except where exempted) and administrator (who is licensed).

Accounts and holding of assets

Every fund shall maintain books of accounts, and submit within four months of the end of the scheme financial year, an audited report of accounts to NBFIRA.

Investigations by actuary – Schemes are required to have their financial condition investigated by an actuary. The Regulatory Authority prescribes the frequency and manner of this investigation.

Minister may regulate investments with regard to investment limits outside Botswana, borrowing limits, etc.

Right to obtain copies of or to inspect documents – Scheme members and pensioners shall be privy, without charge, to copies of fund rules, audited accounts of the fund, actuarial report, and schemes affecting financial soundness of fund.

Appeals with the Regulatory Authority – Any person not happy with the Regulatory Authority’s decision may make an appeal, in writing, to the Minister of Finance within one month.

Penalties – A person who contravenes any provision of the this Act, shall be liable to the specified fine or a fine to be imposed by the Regulatory Authority.

Income Tax Act

Various sections of the Income Tax Act impact extensively on Pension Funds.

An “approved superannuation fund or scheme” means a fund or scheme licensed with the Regulator (NBFIRA) and approved by the Commissioner of Taxes on the proviso that:

It is a separate legal entity from the employer.

It is established and administered by an insurer in terms of the Insurance industry Act (Deferred Annuity Fund or Retirement Annuity Fund).

The annuity is to be purchased from an insurer under the Insurance Industry Act (unless purchased from itself or a pension fund licensed under the Retirement Funds Act).

The Rules set minimum retirement age at 55 (except in case of ill health) but enables an employer contributing a minimum of 51% of total contributions, to allow retirement from age 50.

Proven ill health is permitted retirement at any age.

Contributions are tax deductible up to a maximum of 15% employee and 20% employer.

Commutation limits are set at a maximum of 33% of total benefit at retirement (tax free). Residual amounts of less than P5000 are encashable in full.

Retrenchment cash withdrawal limits are set at the greater of 33% or P5000 with only 1/3 tax exempt; Residual amounts of less than P5000 are encashable in full.

Voluntary withdrawal cash withdrawal limits are set at 25% or P5000 of the total benefit fully taxed. The whole amount is taxed as earned in the year received.

A pension amounting to P5, 000 per annum or less is fully commutable.

Death benefit limited to 4 x annual salary (if GLA linked to Pension fund)