Africa-Press – Botswana. A series of appeals against the Non-Bank Financial Institutions Regulatory Authority (NBFIRA) decisions has brought to light how retirees and pensioners are at risk of pension poverty. The series of rulings on appeals by the NBFIRA Tribunal also dashed hopes of retirees and pensioners who were hoping to survive on the age pension. They have detailed their harrowing conditions before the tribunal, explaining how they were unable to finance their medical bills, afford necessities, and pay off their personal loans.
The retirees and pensioners requested the Tribunal to review the decision of NBFIRA in terms of which their request to encash the balance of their retirement in full was declined. The Tribunal rejected a number of similar appeals decided last brought by retirees and pensioners against NBFIRA, requesting that their two-thirds retirement benefit be paid as a lump sum payment so that they may be able to afford necessities and seek medical assistance for themselves without relying on the Government.
NBFIRA also argued that while the new Income Tax (Superannuation Funds) Regulations, SI No. 147 of 2022, had been passed on 25 October 2022 revising the limits of withdrawals, the said regulations are inapplicable to their retirees’ cases as they had retired before it came into force. In most cases, the documents also show that the initial one-third retirement benefit has already been paid to them. Some of them argued that they are unemployed or suffer from ill health and are unable to afford their medication and medical expenses. Hence, their request to encash the balance of their retirement benefit in full.
But the Tribunal upheld decisions of NBFIRA that there is no law that gives the Authority any discretionary powers to order the withdrawal of retirement benefit in excess of what is prescribed by the law. In some cases, the Tribunal found that at the time of the appellants’ retirement, the 2014 Act was the law in force, and they retired pursuant to the said legislation. At the time of the hearing, the 2014 Act had been repealed and replaced with the Retirement Funds Act, 2022 (“2022 Act”). Therefore, the Tribunal grappled with this question: Does the Retirement Funds Act, 2014 permit two-thirds encashment of retirement benefits for the payment of loans and medical expenses? According to the Tribunal’s findings, “there is no law that comes to the assistance of the Applicant to assist (appellants) to encash all (their) retirement benefit on medical grounds.”
In one of the cases involving a retired teacher, the Tribunal said, “The Applicant was duly paid her one-third pension benefit in terms of the Fund Rules and the Retirement Funds Act, 2014.” According to the Tribunal’s ruling, “The applicable law (2014) does not permit encashment of the full retirement benefit as she is above the threshold; Therefore, insensitive as the Tribunal may appear, the applicable law does not permit the Applicant to encash her retirement benefit in full.” Rather, the Tribunal said, the 2014 Act, as compared to the 2022 Act, “compels her to purchase an annuity from a registered insurer or the Fund itself.”
The Tribunal, in some instances, found that, “While it is fundamentally true that the Applicant’s situation is touching, it is important to note that the Tribunal is a creature of statute and can only Act within the precincts of the law.” According to the Tribunal, “It has no discretion beyond what the law provides; It cannot exercise power unless the law permits it to do so,” adding that “There is no law that authorizes the Tribunal to temper with the dictates of the law based on humanitarian grounds.”
“Sensitive as the Tribunal may be towards the Applicant(s’) plight, the Tribunal has no legal power to order payment of the full retirement benefit in (their) favor for the purposes of financing (their) medical expenses.” According to the Tribunal, if it was “to grant the Applicant(s) (their) wishes, it will be acting without legal authority which amounts to acting lawlessly, something that a constitutional democracy cannot permit.”
In addition, according to the submissions before the Tribunal, “neither the applicable Retirement Funds Act, the Fund Rules nor the Income Tax Act permit any further withdrawal benefit to be paid to the Applicants.” It is evident that the tribunal found NBFIRA acted in compliance with the provisions of the Fund Rules, the provisions of the Income Tax Act, and the Act. “Therefore, the Applicant (s) request for (their) retirement benefit to be paid to (them) in full cannot be upheld,” the tribunal said, adding that “In consideration of (their) existing plight, and the fact that there were no protracted arguments delaying the proceedings, the best consideration in the circumstances is that there be no order as to costs.”
In another ruling, the Tribunal indicated that one of the applicants, as a retired soldier in the Botswana Defence Force, is bound by the rules of the Botswana Public Officers Pension Fund (“Fund”). “His claim can only succeed if he can show that the Respondent in upholding the decision of the Administrator did not act in terms of the Fund rules and the applicable law,” the Tribunal said. It said pursuant to section 32 (13) of the Income Tax Act, withdrawal of a pensioner’s contribution is to be determined according to the Fund rules as well as the Income Tax (Superannuation Funds) Regulations. “Regulation 2(1)(e) of the Superannuation Funds Regulations permits the Applicant to access one third percent of his pension on retirement. It further provides that where the pension payable to the pensioner after communal of the one third is less than P5 000 per annum or P417 per month, the Commissioner General may grant approval for payment of such pension as a single lump sum payment,” the Tribunal said. It added that; “It is clear that for the Applicant to succeed in his claim he must fall within the ambit of the aforementioned provision.”
“Further, no law permits or grants the Tribunal, or the Commissioner General, let alone the Respondent the discretion to sanction commutation contrary to the law. While it is fundamentally true that the Applicant’s situation is touching, it is important to note that the Tribunal is a creature of statute and can only Act within the precincts of the law,” the Tribunal said. According to the Tribunal, “It has no discretion beyond what the law provides. It cannot exercise power unless the law permits it to do so,” adding that “There is no law that authorizes the Tribunal to temper with the dictates of the law based on humanitarian grounds.”
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