Guidelines for Registration of Restricted Pension Funds and Licensing of Trustees and Principal Officers

RESERVE BANK OF MALAWI GUIDELINES FOR REGISTRATION OF RESTRICTED PENSION FUNDS AND LICENSING OF TRUSTEES AND PRINCIPAL OFFICERS (Financial Services Act, 2010 and Act) PENSION AND INSURANCE SUPERVISION DEPARTMENT

PART I: OVERVIEW 1.0 INTRODUCTION 1.1. About this guide These guidelines have been developed to assist trustees of a restricted pension fund to obtain a licence and comply with requirements to register a restricted pension fund in accordance with section 16 of the Pension Act, 2010 (the Act). It is recommended that each individual trustee should be familiar with obligations under the Registrar’s Fit and Proper Directive and the Trustees Code of Practice as well as the Registrar’s Directive on Licensing and Registration of Pension Entities. 1.2. Registration of Restricted Pension Funds Registration of restricted pension funds shall be made as specified in these guidelines. For purposes of regulation and supervision, the Registrar shall register three types of restricted pension funds; stand-alone restricted pension fund; self￾administered restricted pension fund; and pooled restricted pension fund. To register a stand-alone restricted pension fund, a trustee must provide evidence that the fund has assets worth more than K1 billion. To register a pooled fund, a trustee must provide evidence that the fund has assets worth more than K100 million and must be under a master trust of an umbrella fund. A scheme with more than K2.5 billion assets can be licensed as a self-administered restricted pension fund if it meets licensing requirements for administrators of pension funds. 1.3. Alternatives to Registration of Restricted Funds It is likely that some groups of existing individual trustees will not seek or otherwise meet requirements for licensing or registration of the restricted pension fund. In this circumstance, a trustee must consult with the employer and members to make alternative arrangements. The most likely solution will be for the employer to nominate an unrestricted fund for the purposes of meeting Pension Act obligations. Unrestricted funds operate under a trust deed governed by a corporate trustee and as defined by the Act, membership is open to any employee or employer. Joining employees to the National Pension Scheme (NPS) under unrestricted funds is a simpler solution and employers are not required to establish a separate trust or

appoint individual trustees. A management committee may however be established only for the purpose of advising the Trustee. 1.4. Winding up of Existing Pension Funds In the event that a trustee has not met the requirements laid under these guidelines, the trustee is required to make a plan to wind up the fund and submit the plan to the Registrar for approval. The Registrar shall approve the plan on satisfaction that the trustee has a) nominated an approved pension fund to transfer member accumulated benefits; b) allocated all reserves and contributions due to members in the member accounts before the transfer; c) certified and closed the accounts of the fund; d) provided exit statements to members; and e) if there are benefits to be paid, are paid as per the requirements of the Act The Registrar shall not approve a plan to wind up a pension fund that provides for payment of benefits to members who are in continuing employment. 2.0 LICENSING OF TRUSTEES AND REGISTRATION OF PENSION FUNDS 2.1. A trustee that governs a restricted pension fund must take action to ensure full compliance with financial services laws by applying for a license. 2.2. A trustee of a pension fund must ensure that the pension fund is registered and that the trust deed and rules of the fund are fully compliant with the Pension Act 3.0 FORM OF APPLICATION FOR LICENSING AND REGISTRATION 3.1. Application for a licence as a trustee of a pension fund must be submitted using the approved forms in accordance with Financial Services (Licensing and Registration) Directive, 2014. 3.2. An applicant must ensure that application forms and all accompanying materials and certifications are complete before submission to the Registrar.

3.3. Forms must be completed in English and supporting documents must be in English. Where original documents are not in English, they must be accompanied by certified English translations. 3.4. If a query or request for information is not relevant, applicants must note ‘no’, ‘none’, ‘not applicable’ or ‘not known’ and provide an explanation where necessary. 3.5. An application for a trustee licence must be duly signed by each individual seeking a licence 3.6. An applicant must provide details of a contact person on matters connected to the application. All communication between the Registrar and the applicant(s) will be directed to the contact person identified. 3.7. Submitting inaccurate or incomplete documentation will delay processing of the application. 3.8. Licensing and Registration processing fees shall be paid by the sponsoring employer(s). 4.0 APPLICATION PROCESSING 4.1. Upon receipt of processing fees, the Registrar shall conduct a due diligence of the application and appropriate verification of materials therein. 4.2. The Registrar may, in his discretion, require further information before processing the application 4.3. The Registrar may reject an application on the basis that the application is inaccurate or incomplete 4.4. The Registrar will notify the applicants of any decision to issue or deny a licence 4.5. The Registrar will not register a pension fund unless it complies fully with the Pension Act, the Financial Services Act and other related laws 4.6. The Registrar will maintain a register of all registered pension funds and licensed trustees. 5.0 ENQUIRIES AND APPLICATIONS

All applications and related enquiries should be addressed to: The Director Pension and Insurance Supervision Department Reserve Bank of Malawi 10 Hannover Avenue PO Box 565 Blantyre. Tel: 01 820 444/299 Fax: 01 822 118 Email: pisu@rbm.mw

PART II – GENERAL REQUIREMENTS 6.0 LICENSING REQUIREMENTS FOR AN INDIVIDUAL TRUSTEE 6.1. Each individual trustee must complete an application in duplicate as follows;- (a) Complete PLR F 9 Applicant Details – Individual Trustees (b) Complete Fit and Proper Person Questionnaire 6.2. An application must include the following documents (a) A photo identification issued by a Government institution (b) letter from a licensed Credit Reference Bureau detailing the applicant’s past track record with credit (c) a copy of utility bill in the person’s name or from the person’s normal place of residence. Where utility bills are not issued, a letter from the chief/village headman verifying an applicant’s place of residence; (d) A brief resume identifying employment and residential addresses for the past 10 years; (e) A police report attesting that the applicant has never been convicted of an offence involving dishonesty, fraud, or an offence the maximum penalty for which is not less than twelve (12) months imprisonment 6.3. Where an applicant is an independent trustee, the applicant shall, in addition to the requirements 6.1 and 6.2 above, submit a letter of appointment signed by a licensed trustee, who is a chairperson or authorized representative of the chairperson of the appointing pension fund trustee board. 7.0 LICENSING REQUIREMENTS FOR A CORPORATE TRUSTEE 7.1. The applicant(s) must complete the relevant forms and provide supporting information as follows: (f) PLR F1: Applicant Details – Company;

(g) PLR F3: Responsible Person Details – Directors (to be completed for each director); (h) PLR F5: Responsible Person Details – Other Responsible Persons (to be completed for each responsible person); (i) PLR F6: Significant Owners – Natural Persons; (j) PLR F7: Significant Owners – Corporations; 7.2. Each director must include the following documents (k) A photo identification issued by a Government institution (l) letter from a licensed Credit Reference Bureau detailing the applicant’s past track record with credit (m) a copy of utility bill in the person’s name or from the person’s normal place of residence. Where utility bills are not issued, a letter from the chief/village headman verifying an applicant’s place of residence; (n) A brief resume identifying employment and residential addresses for the past 10 years; (o) A police report attesting that the applicant has never been convicted of an offence involving dishonesty, fraud, or an offence the maximum penalty for which is not less than twelve (12) months imprisonment 7.3. The applicant(s) shall in addition to requirement 7.1 and 7.2 above, submit a Letter of Appointment from a registered pension fund to operate as a trustee of the fund signed by authorized representatives of the appointing pension fund 8.0 LICENSING REQUIREMENTS FOR A PRINCIPAL OFFICER 8.1. An applicant must complete an application in duplicate as follows;- (c) Complete PLR F 4 Responsible Person Details– Principal Officer (d) Complete Fit and Proper Person Questionnaire 8.2. An application must include the following documents

(p) A photo identification issued by a Government institution (q) letter from a licensed Credit Reference Bureau detailing the applicant’s past track record with credit (r) a copy of utility bill in the person’s name or from the person’s normal place of residence. Where utility bills are not issued, a letter from the chief/village headman verifying an applicant’s place of residence; (s) A brief resume identifying employment and residential addresses for the past 10 years; (t) A police report attesting that the applicant has never been convicted of an offence involving dishonesty, fraud, or an offence the maximum penalty for which is not less than twelve (12) months imprisonment 9.0 REQUIREMENTS FOR REGISTRATION OF A RESTRICTED PENSION FUND 9.1. An applicant wishing to register a Restricted Pension Fund shall provide, (a) where the applicant is an existing pension fund; i. a statement showing in detail the latest valuation of assets and liabilities made by a valuator, including particulars as to the principles applied in making such valuation, or, if no such valuation has been made, such particulars regarding the financial condition of the fund as the applicant may possess; and ii. such financial condition shows that the applicant has pension assets worth not less than K1 billion and K2.5billion if registering a stand-alone restricted fund and a self-administered restricted pension fund respectively; or iii. if registering a restricted fund under umbrella fund (pooled fund), such financial condition shows that the applicant has pension assets worth not less than K100 million.

(b) where the applicant is applying to establish a new fund, the applicant shall provide details of the umbrella fund in which the applicant is registering under. 9.2. A trustee of the fund shall Complete PLR F 10 - Additional Information for registration of a restricted pension fund, and shall include in the application; (a) Name, address and Tax Payer Identification Number (TPIN) of sponsoring employers; (b) A copy of a trust deed and fund rules that contains minimum requirements specified in the standard deed and rules attached to these guidelines; (c) A certification by legal advisers that trust deed and rules comply with the financial services laws including Registrar’s standard trust deed and rules. (d) A copy of the pension fund’s investment strategy (e) Copy of service agreements with all key service providers including administrator, investment managers and custodian. (f) For existing pension funds i. provide a sign off from an appointed actuary regarding adequacy of funding of pension obligations, where the fund is a defined benefit or hybrid pension fund ii. Where the fund is a Defined Contribution fund, a plan for immediate equitable distribution of reserves or unallocated liabilities where the reserves or unallocated liabilities are more than 5% of the total liabilities of the pension fund. 9.3. A trustee must complete PLR F 11 Certification – Group of Individual Trustees, confirming each individual’s endorsement of the completed application and commitment to the Code of Practice for Pension Trustees. 10.0 SPECIFIC REQUIREMENTS FOR REGISTRATION OF A SELF ADMINISTERED RESTRICTED PENSION FUND

10.1. Where a restricted pension fund wishes to conduct its own administration, a trustee must adhere to the following specific requirements before making an application; The fund must show that it has- (a) Appropriate governance structures in place (b) the professional and technical capacity to administer restricted pension schemes and retirement benefits; (c) an appropriate Information and Communication Technology (ICT) infrastructure in line with guidelines on Information and Communication Technology for Pension Administrators; 10.2. Before commencement of operations the licensee must submit a commencement letter and obtain an approval from the Registrar who will then conduct an onsite visit to verify - (d) If pension administration platform and other information and communication technology facilities are in place. (e) Readiness of various operating policies and procedures that will ensure an effective and efficient management of information. PART III - SUBMISSION Completed and signed application forms can be submitted to any of the following address: The Registrar of Financial Institutions Reserve Bank of Malawi Independence Drive PO Box 30063 Lilongwe 3 The Director, Pension and Insurance Supervision Reserve Bank of Malawi 10 Hannover Avenue PO Box 565 Blantyre