In December 2023, the Financial Conduct Services Authority (FSCA) sent a communication to the Principal Officers of many retirement funds requesting information relating to transformation in respect of certain service providers.
Funds were requested to complete the following assessment:
The assessment had to be returned to the FSCA through its online submission portal by 31 January 2024.
The FSCA states that it has set itself supervisory priorities for the current financial year, which includes considering the extent to which Regulation 28 principles are embedded within retirement funds.
Regulation 28 provides that retirement funds have a fiduciary duty to act in the best interest of their members, whose benefits depend on the responsible management of assets. This Regulation requires a fund and its board to consider, in contracting services to the fund or its board, the need to promote broad-based black economic empowerment of those providing services.
The assessment should create a baseline for the FSCA to supervise and regulate the effect of the Conduct of Financial Institutions and regulatory interventions on the transformation progress of funds.
The Pension Funds Act (the Act) requires every fund, within six months of the end of every financial year, to provide the prescribed financial statements to the FSCA that have been audited by the auditor of the fund.
From 21 December 2023, the FSCA’s RF Notice 26 of 2023 replaces RF Notice 5 of 2020, (the Exemption of Large Funds from certain prescribed formats for preparing financial statements under section 15 of the Pension Funds Act).
“Large Funds” are defined as funds with total assets exceeding R50 000 000.
The RF Notice has been published because the prescribed format of annual financial statements does not align with the amendments to Regulation 28 of the Act.
To ensure alignment with the amendments to Regulation 28, the FSCA is planning to replace the current BN 77 Notice with a Prudential Standard, which is currently in draft format.
But in the interim, to deal with the issue of BN77 not currently aligning with Regulation 28, the FSCA has published exemptions in relation to infrastructure reporting and certain Schedules.
The exemption of large funds from the provisions of section 15 of the Act provides for three scenarios:
For the preparation of financial statements in respect of a financial year that ends after 1 March 2018, a Large Fund is exempted from the requirement to complete Schedule D1 when preparing financial statements but must complete the Independent Regulatory Board of Auditors (IRBA) approved illustrative “Auditor’s report template: Audit of the Financial Statements of a Large Retirement Fund (Schedule D)”.
For the preparation of financial statements in respect of a financial year that ends between 1 March 2018 and 31 December 2022, a Large Fund is exempted from the requirement to complete Schedule IB1, but must complete IRBA’s illustrative “Assurance Report on Compliance with Regulation 28 of the Pension Funds Act” that was approved by IRBA in March 2019; and
For the preparation of financial statements in respect of a financial year that ends after 31 December 2022, a Large Fund is exempted from the requirement to complete Schedule IB1 but must complete Annexure A to the notice “2023 Assurance Report on Compliance with Regulation 28 of the Pension Funds Act”.
Cookies are small text files that are stored on your device (computer, tablet, or mobile phone) when you visit certain websites. They are widely used to enhance your online experience by remembering your preferences and actions over time. Cookies are not harmful and do not contain personal information like your name or payment details.
You have the option to manage your cookie preferences. You can usually modify your browser settings to accept, reject, or delete cookies. Please note that if you choose to block or delete cookies, some features of our website may not function properly.