The Financial Sector Conduct Authority (FSCA) has estimated that the implementation of the two-pot system of retirement, which came into effect on September 1, has cost the industry R1.63bn.
FSCA deputy commissioner Astrid Ludin told a finance committee of MPs on Tuesday that in addition to this, retirement funds and administrators expect ongoing costs driven by queries and the submission of claims amounting to a probable R300m annually.
The industry expected to recover the initial and ongoing fees over an extended period of about six to seven years, recovering about half the expenditure in about four years.
Retirement funds and administrators had adopted different ways to recoup the implementation costs: 64% absorbed all or some of the costs, 6% charged a one-off fee to members, 47% charged a savings withdrawal fee, employers or pension funds made a payment in 13% of cases and 14% increased the base administration fee.
Ludin said the R1.63bn was broken down into R1bn for system changes, R26.5m for staff training, R306m for additional administrative staff, R28.3m on establishing or expanding the call centre, R54.5m on member communication and R161m on other costs.
She noted that given the scale of the changes, implementation of the two-pot system had gone “very smoothly”.
The FSCA has probed the question of fees charged by retirement funds, an issue discussed at the National Economic Development and Labour Council.
Last week, Sars said it had issued 1.9-million tax directives for two pot withdrawals valued at R35bn.
A study by Keystone Actuarial Solutions estimated the average fee charged by pension funds and administrators for a withdrawal to be about R320.
On the basis of an average R320 charge on the total of 2.15-million withdrawals, pension funds and administrators would have made a total of R608m since the two-pot system came into effect.
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