DOCUMENT J

PRI CONTRUBITIONS – Many of SS security officers are sole breadwinners. Like any other profession our
employees’ future savings and financial choices can vary widely based on individual circumstances,
economic conditions and cultural factors. Even though we make a concerted effort to upskill our security
officers, they do not have “other savings” and rely on the provident fund for their future savings when either
retiring or resigning (our security officers cannot take out loans against their provident fund). As an
employer, we cannot take responsibility of the governance of PSSPF, but can we do more to ensure that
the funds contributed to the provident fund are sufficient for the employees when they retire or resign?

RESEARCH UNERTAKEN:
Understanding the issue?
The main aim of the Private Security Sector Provident Fund is to provide benefits for security employees when they
retire from employment. The PSSPF pays the benefits when a member dies while still working, or is unable to work
because of illness, is retrenched or resigns.
Section 13 A of the Pension Fund Act (PFA) requires that employers pay contributions for a particular month within
seven days after month end, that they provide member schedules in respect of contribution payments to the fund and
that the compound interest is paid on late contributions.
Therefore, the submission of correct contributions and schedules, as stipulated by law, will be of great value to the
seamless administration of the fund.

Responding to the issue in the context of the case study (Security Industry)?
CONTRIBUTIONS BY THE EMPLOYER (SPS) CONTRIBUTIONS BY THE EMPLOYEE
With effect from 01 September 2010, the EMPLOYER made a All members must contribute to the FUND at
monthly contribution towards the FUND in respect of each the rate of 7.5% of FUND SALARY
MEMBER in its service at the rate of 7.5% of FUND SALARY. In
addition, the EMPLOYER may make additional voluntary
contributions iro a member.
REDUCED CONTRIBUTIONS

A member entering the PRIVATE SECURITY SECTOR for the

time or who has been out of the PRIVATE SECURITY SECTOR
for more than 6 months.

The EMPLOYER contributes 5% of the MEMBER’S FUND

SALARY

The reduced contribution rate of 5% will come to an end on 31

August 2022 and the normal contribution rate of 7.5 % will apply
for members and employers effective 1 September 2022.
(Maximum working hours = 48hours per week)
Refer to pricing guide on the Salary Grades

REVISED: FUND SALARY shall mean in respect of a MEMBER, his monthly earnings as advised to the
FUND by the EMPLOYER.

WHAT CAN SPS DO?

1. SPS shall from time to time furnish to the FUND in respect of those employees who are MEMBERS all
necessary particulars affecting their benefits or their entitlement to benefits under the FUND and the FUND
shall ensure that such particulars are furnished to the ADMINISTRATORS. (Access Statements and share
with the security officers so that they know how much they have in the FUND, request the statement from
the administrator at least every quarter instead of once a year.)

2. In addition, SPS may make additional voluntary contributions in respect of a MEMBER or group of
MEMBERS in its SERVICE. SPS can also workshop the security officers on the importance of making
voluntary contributions and should encourage the employees to also make voluntary contributions.
 3. Encourage the employees to purchase a retirement annuity fund with, e.g., Sanlam or Banks (Financial
Institutions). How do the Retirement Annuity Funds work? The main difference between pension or
provident funds and retirement annuities is that in a retirement annuity, the investor owns the investment in
their own right and membership is not tied to their employment status. In other words, their investment can
continue, and they can keep on contributing, even if they leave their employer.

Not taking out loans against the provident fund?

13.2. Housing Loans
The TRUSTEES shall have the power to furnish a guarantee in respect of a loan by some other person to a
MEMBER for a purpose referred to in Section 19(5)(a) of the ACT and, if so required for such purpose, may make a
pledge with a bank or building society as collateral security. Such a guarantee shall be subject to the provisions of the
ACT and the requirements of the REGISTRAR.
PRI – I am concerned about whether SPS contribution to the provident fund are reflected as accurate and
complete. We can learn some lessons from the auditors about identifying risks and getting assurance. I
thought we could perform our “own procedures” to ensure the accuracy and completeness of our
contributions to the provident fund.
Controls (Lack of such control will lead to risks)
These controls must cover the information systems on which the estimates and the financial reporting will
be heavily dependent Insurers will need to ensure appropriate business processes and controls are
developed and implemented effectively, to enable the development of IFRS 17 estimates and other key
elements of IFRS 17, including, but not limited to, the following:
● Estimates of the expected value of future cash flows are accurately captured,
aggregated, recognised and measured.
● Controls operate over the probability distribution to ensure that it is calibrated to produce
a statistical mean of probability-weighted cash flows;
● Discount rate curves are appropriately applied to reflect the time value of money and
financial risks and reflect the characteristics of the contract;
● The risk adjustment is consistently calculated based on management’s methodology and
risk appetite established for the entity’s consideration of non-financial risk;
● Onerous contracts are identified, and loss components calculated and captured correctly;
● The contractual service margin is appropriately calculated and released, and
● Data and inputs into these calculations are accurate and reliable.
Furthermore, insurers will need to have processes and controls in place to ensure that:
● The methods selected and data used are appropriate;
● The judgements made in selecting the methods, data and significant assumptions are
clearly documented and have been applied consistently;
● The calculations are applied in accordance with the methods selected and are mathematically accurate;
● The calculation models are subject to appropriate governance to ensure that they operate as designed;
● The integrity of the assumptions and the data has been maintained in applying the methods;
● The assumptions are appropriate in the context of IFRS 17; and
● The data is relevant and reliable in all circumstances and has been appropriately understood by
management.