ASISA Retirement Savings Cost Disclosure Standard aims to build trust
The new ASISA Retirement Savings Cost (RSC) Disclosure Standard, which came into effect on 1 March 2019, aims to build trust in the savings and investment industry through meaningful disclosure.
Taryn Hirsch, senior policy consultant at ASISA, in a statement on ASISA’s website said ASISA members are required to submit compliance certificates to ASISA annually certifying that the RSC calculations and disclosures comply in all respects with the letter and spirit of the RSC Disclosure Standard. The certificate must be signed by the company’s CEO as well as either the auditor, statutory actuary, or chief compliance officer.
ASISA announced the implementation of the RSC Standard in a media release issued in May last year.
Development of the new Standard
ASISA and its members started developing the new RSC Disclosure Standard almost three years ago in consultation with a number of stakeholders, including the Financial Sector Conduct Authority (FSCA), intermediaries and Batseta (the Council of Retirement Funds for South Africa).
In terms of the new Standard, ASISA members that administer umbrella retirement fund solutions are committed to presenting all relevant costs (based on certain assumptions) in a standardised manner. This will allow employers to compare like with like when considering quotations for umbrella retirement fund solutions from different ASISA members. The Boards of Trustees of umbrella funds will also find it easier to consider costs as part of their fiduciary duties.
The current RSC Disclosure Standard is only relevant at an employer and trustee level. “It is not a fund member cost disclosure standard and is not designed for disclosure to individual fund members. It should therefore not be confused with the Retail EAC Standard,” Hirsch said.
The RSC Disclosure Standard also does not apply to stand-alone retirement funds, retirement annuity (RA) funds, preservation funds, beneficiary funds and other retail savings products covered under the Retail EAC Standard.
Disclosure at member level
The ASISA RSC Disclosure working group has completed the development of an umbrella fund member-level disclosure standard, which is awaiting ratification by the ASISA Board. Should this be approved, it will come into effect on 1 October 2019.
Disclosure at member level will, for example, enable employees to factor in cost decisions when deciding on whether to allocate additional funds to either their umbrella fund or an RA.
The RSC Disclosure Standard in a nutshell
By 1 September 2019, ASISA members will provide employers and trustees of umbrella funds with a disclosure template indicating all costs that will be incurred at a scheme level.
The template will reflect four separate components into which various charges are allocated over various investment periods:
- investment management charges;
- advice charges;
- administration charges; and
- other charges including regulatory, compliance and governance costs.
The RSC is calculated separately for each of the four components and then totalled to derive the RSC for the umbrella fund as a whole. The value for each of the components, as well as the total RSC, is expressed as a percentage of the investment amount in a table at four mandatory disclosure periods.