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An Educational Programme
Adequate Transitional Arrangements
Amendments to Related Laws
The success of the planned reforms hinges largely on two
broad factors. First, proper procedures must be put in place to facilitate a smooth
transition from the current arrangement, and second an environment suitable to the
implementation process must be created. The critical pre-requisites of the implementation
process are listed below:
An Educational Programme
A nation-wide drive to educate various sections of the
public, as to the reasons for the reforms, the benefits most applicable to them, and the
roles they are expected to play, is very important. This must be specific to employers,
members of schemes, trustees and managers.
Adequate Transitional Arrangements
In all the reforms to be implemented, an adequate
transitional period is to be allowed. During this period all the participants will be
expected to make the necessary adjustments. The reforms are not intended to create
widespread dislocation, and as such, should be implemented gradually, and with due concern
for the existing parties. The transitional period should however, not be allowed to
continue indefinitely, but should be clearly prescribed at an early stage.
Examples of the areas to be given special attention when
developing the transitional arrangements are:
- the mandatory vesting of pension rights, the provisions of
which shall not apply to those persons covered by the Income Tax (Termination of
Employment) Order, 1971, and shall ensure that people who were entitled to tax-free
refunds of employees' own contributions up to the date of enactment of the law, shall be
grandfathered;
- the satisfaction of the investment criteria;
- amendments to incorporate satisfactory winding-up
provisions, including the allocation of surpluses;
- a timetable for solvency maintenance and minimum funding
criteria;
- the creation of funded schemes for public servants;
- information to be provided to members; and
- Income Tax Department implications.
Amendments to Related Laws
The Income Tax Act
Where necessary the relevant sections of the Income Tax
Act will be amended to ensure compatibility with the policy underlying the new National
Pensions Act. The specific tax concessions for individual contributors and the funds will
continue as provisions under the Income Tax Act, but entitlement will be subject to prior
plan registration being effected under the National Pensions Act.
The National Insurance Act
The Ministry of Labor, Social Security and Sports shall be
encouraged to propose amendments to the National Insurance Act for enhancement of scheme
benefits, and to improve the administration of the NIS.
Existing Pensions Acts covering Public Servants,
teachers, etc.
There are a number of Pensions Acts governing pension
benefits for workers in the public sector. Where appropriate, the necessary amendments
will be effected towards achieving consistency in the system and to facilitate the
approved reforms.
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