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The power to deduct pension benefits under Lesotho's Pension Funds Act: Lessons from South Africa and Eswatini
Mtendeweka Mhango
Teron Rikhotso
Abstract
The changing demands of society and the emergence of new challenges necessitate the constant evolution and improvement of legal frameworks. In November 2019 Lesotho adopted the Pension Funds Act 5 of 2019 to modernise its regulation and supervision of private pension funds. Previously pension funds were regulated under the Income Tax (Superannuation and Assurance) Regulation, 1994 (Superannuation Regulation). Industry participants were of the opinion that the Superannuation Regulation was inadequate for the complexity of Lesotho's private pension funds system. The primary purpose of the Pension Funds Act of 2019 is to safeguard the financial interests of pension fund contributors and ensure their receipt of retirement benefits on retirement. With limited exceptions, section 40 of the Act prohibits the transfer or deduction of pension benefits. This article investigates the legal framework that regulates the power of a pension fund to deduct from pension benefits as well as the limitations on this power. The purpose of the article is to propose possible interpretations of the power to deduct, with the intention of assisting those who are involved in its implementation.
