Employers may soon be able to automatically use funds from their employees' retirement funds to back up their business within pre-determined limits.
At the moment employers and companies cannot automatically draw on the retirement funds they sponsor as an extra source of finance without permission of the Registrar of Pension Funds.
The permission, normally within five percent of assets, is currently widely given.
In terms of legislation tabled in Parliament this week the right will be given to retirement funds to invest in the fund's sponsoring company or employer and also to lend money to the employer. Approval will also have to be given by the trustees of the fund.
Funds will not however be able to invest or lend more than a fixed percentage of their assets to an employer. The percentage will be set by regulation.
The legislation also closes a loophole which has enabled employers to hold back pension fund contributions of employees to retirement funds.
In future employers will have to pay the money over within seven days of the end of the month or interest will have to be paid on the outstanding amounts.
The Registrar in future will also set down regulations which will prescribe minimum levels of information that employers will have to provide to employees about the payment of contributions to their retirement fund.
Retirement fund members may also be given additional protection if an employer withdraws from a fund. At the moment stipulations which protect members when a fund is terminated or dissolved do not apply to funds where the employer withdraws from the fund but the fund continues to exist.
The draft legislation will extend the same provisions that apply to funds being terminated or dissolved to funds in which an employer is no longer involved.