NEARLY two years after its passage in Parliament, the Pensions Act may finally become fully effective this year.

A Senate committee, whose review of proposals to amend the new Act had stalled the process since last year, decided Thursday to complete its report by next month. However, the committee has expressed a number of concerns about the regulations which are expected to be highlighted when the amendments are debated in both the Senate and the House later this year.

Both government and opposition senators have expressed concerns about the regulations, which are required to make the Act fully effective.

In the meantime, the Senate had referred two amendments to the new Act being sought by the minister of finance and planning, Dr Omar Davies, to the Senate committee.

The committee agreed Thursday to Dr Davies’ amendments, which are seeking to change two controversial aspects of the Act, but on condition that their concerns about aspects of the regulations be included in the report.

A draft copy of the report is to be discussed at a final meeting, tentatively scheduled for March 9 at Gordon House. It is likely to be debated and voted on by the Senate prior to the conclusion of the current session of Parliament.

Dr Davies’ bill sought to amend the provisions of the Act to:

(1) remove the provisions for trustees of pensions funds to be subjected to criminal prosecution for dereliction of their duties; and

(2) modify the requirements of the Act applying to companies seeking to be licensed as investment managers of pensions funds, so that they will not be required to be licensed as securities dealers.

Under the 2004 Act, trustees of pension funds were required, among other things, to submit timely returns and satisfy other reporting requirements. Failure to do so constitutes a criminal offence which may attract a potentially substantial monetary and/or custodial penalty.

But, according to Davies, “trustees should not be faced with criminal sanctions for such dereliction, especially because this may happen notwithstanding their exercise of reasonable care and due diligence”.

In terms of the licensing of the investment fund managers as securities dealers, he said that the requirement “has been considered to be somewhat onerous in cases where the assets to be managed are self-administered, in that they are those of funds established by or connected to the sponsor of a particular fund”.

The committee’s concerns include the lack of provisions for employees or members of pensions funds to nominate trustees.

According to government senator Trevor Munroe, “this omission is unacceptable”.

Asked Munroe: “Employees hard-earned money is in the fund, so is it the employee’s or the company’s? Yet it is only the employer who would choose trustees. This is clearly wrong.”

Dr Munroe also contended that the regulations gave the Financial Services Commission (FSC) too much power.

He said that a prime example was Clause 32, where the FSC has the power, after approving the rules of the scheme, to impose on the trustees and members of the pension scheme being wound up “its own formula for the disposition of the surplus”.

Opposition Senator Shirley Williams, who also opposed some of the powers given to the FSC under the Act, has insisted that her objections to the recognition given to Caricom in the investment regulations be included in the report.

Senator Williams said that it was unfair for pension funds to be limited to investing only five per cent of their finances in Caribbean Community (Caricom) assets, while the region was moving towards a single market.

“I am well aware that the government is going to proceed with these regulations and the amendments to the Act before the financial year is out. I am making sure that my position is documented and you are not going to get me to say that I agree with the regulations. I have an objection to the regulation as it relates to foreign security investments,” Williams said.

Chairman of the committee, Senator Noel Monteith, said that the report would reflect her concerns.

Senator Munroe, in the meantime, said he would be willing to have his concerns addressed in phase two of the pension reform programme.

FSC head Brian Wynter said that his body was prepared to accept any definition of foreign security investments which is acceptable to the Bank of Jamaica foreign exchange regime.