BUSINESS PARLIAMENTARY OFFICE

REPRESENTING BUSINESS UNITY SOUTH AFRICA (BUSA) AND CHAMBERS OF COMMERCE AND INDUSTRY SOUTH AFRICA (CHAMSA)

28 May 2007

Dear Sir I Madam

Pensions Funds Amendment Bill

I refer to your invitation of 21 May 2007 to BUSA I CHAMSA addressed to Advocate Meiring to make input on the above Amendment Bill.

Please be advised that we will not be making an oral submission as our views have been the subject of discussions with industry bodies such as the Institute of Retirement Funds, the Life Offices' Association, the Linked Investment Services Providers and others. The issues at hand are mostly technical and we would leave the considered response to these bodies.

There are, however, two issues of principle that BUSA I CHAMSA would like to put before the honourable Portfolio Committee: -

1. The so-called "surplus legislation" has often been experienced by our members as problematic in practice although sound in principle. The current amendments are therefore welcomed but the retroactive nature (effective from 7 December 2001) is of concern. Business believes that the inevitable cost that retroactivity would entail needs to be quantified and measured against the potential benefits. It is only once such a cost benefit analysis has been done that one could be confident about not embroiling the private sector (and for that matter the Regulator) in unduly costly corrective action.

2. Business supports the free market principles which inform transferability from one retirement annuity fund to another. We understand that the payment of fees or commission could potentially influence real freedom of choice and that full disclosure as envisaged by the Financial Advisory and Intermediary Services Act is paramount. If Parliament is confident that the FAIS Act (which is now almost 5 years in operation) is effective, it should not be necessary to resort to ad hoc curtailments of particular fees or commissions which are duly disclosed. We would also, in this context, point out that a level playing field between competing service providers is as important as full disclosure to potential consumers

Business acknowledges that these matters are under revision by National Treasury.

Advocate Meiring will be attending the briefing by National Treasury and will be available during the Hearings on the 30th May to provide input or clarify our stance should this be required.

Yours sincerely

Melanie Thomas: Acting Secretary

Business Parliamentary Office