NOTICE
FINANCIAL SERVICES BOARD
No. _____
_____ 2012
PENSION FUNDS ACT NO 24 OF 1956:
MINIMUM INFORMATION AND FORMAT OF SUBISSION FOR RULE AMENDMENTS
AND CONSOLIDATED RULESREQUIREMENTS FOR THE REGISTRATION OF A FUND
AS PER SECTION 4(3) OF THE ACT
1.
NEW RULES
1.1. Funds are advised to ensure that the rules submitted for registration are
comprehensive and due consideration is given to the requirements of the
Board Notice, prescribed forms and procedures, and the requirements of
the Act.
1.2. Where the Office of the Registrar is unable to grant final registration to a
fund, the Registrar may provisionally register the fund on condition that
the application complies with the minimum requirements as recommended
in Annexure A.
1.3. Funds are required to apply for final registration once all the queries
raised on the provisional registration letter have been addressed.
1.4. An application for final registration of umbrella funds with special rules
(Type-A umbrella funds) will only be considered following the registration
of a participating employer.
2.
UNREGISTERED FUNDS AND SUB-FUNDS
2.1. Any fund which conducts pension fund business for a period exceeding
twelve months will, for the purpose of section 12(1)(b) of the Act be
regarded as having conducted unregistered pension fund business,
including those funds and participating employers (“sub-funds”)
participating in umbrella funds.
2.2. Applications for the registration of such unregistered funds must be
submitted simultaneously to the Registrar and SARS.
2.3. The application for the registration of a fund or special rules in the case of
a participating employer which conducted unregistered pension funds
business, must be accompanied by2.3.1.
3.
a declaration by the board of management of a fund confirming
the rules of the fund as submitted to the registrar for registration
have been complied with in respect of the following2.3.1.1.
that the fund has since its establishment been
administered and managed in terms of those rules;
2.3.1.2.
that contributions have been received in terms of
those rules or special rules;
2.3.1.3.
that benefits have been administered and paid in
accordance with the rules or special rules; and
2.3.1.4.
that the members’ individual accounts and fund
records and data are complete and accurate.
2.3.2.
Annual financial statements, where applicable, audited annual
financial statements, from the date of the commencement of the
fund until the financial year-end preceding the application for
registration. Any such reporting period may not exceed 18
months.
2.3.3.
Where the period from commencement of the fund until the
financial year-end preceding the application for registration
exceeds three years, an actuarial valuation report confirming that
the fund is financially sound and that the members’ individual
accounts are complete and accurate.
AMENDMENTS TO THE RULES, CONSOLIDATED RULES, REVISED
RULES AND REVISED SPECIAL RULES
3.1. Amendments
3.1.1.
The application for amendments to rules, consolidated rules,
revised rules and revision of special rules must in terms of section
12(2) be accompanied by a duly certified copy of the resolution
passed by the trustees. An example of such resolution is hereby
attached as Annexure A.
3.1.2.
Amendments to rules must be sequentially numbered and
submitted for registration in that order.
3.1.3.
Application for amendments of the main set of rules and revision
of special rules must be submitted separately.
3.1.4.
A maximum of ten amendments to rules will be allowed,
whereafter a fund must submit consolidated or revised rules.
3.2. Consolidated Rules
3.2.1.
Consolidated rules must not include any additional amendments
to rules but must only consolidate registered rules and
amendments.
3.2.2.
The Registrar does not have the authority to register consolidated
rules which are not compliant with current legislation.
3.3. Revised Rules
Where a fund wishes to consolidate the registered rules and further
amendments need to be made, such rules must be revised. Additional
amendments not previously registered must be indicated on the
resolution.
3.4. Special Rules (Type A Umbrella Funds)
In an Type-A Umbrella Fund, special rules must be registered for each
participating employer, excluding associated and subsidiary entities. No
amendments to special rules will be considered but any amendments
must be incorporated into revised special rules.
special rules must be indicated on the resolution
4.
Any amendments to
STANDARD RULES
4.1. An administrator who intends to register a standard set of rules must
agree the format, content and the relevant schedules to the standard rules
with the Registrar prior to the submission thereof.
Amendment to standard rules
4.2. Prior approval of the Registrar must be obtained before any amendments
to standard rules are submitted for approval. Upon registration of the
amended set, the Registrar will allocate a new alpha numeric number
relevant to such amended rules.
Schedule (s) to standard rules
4.3. When submitting a set of new rules for registration, the fund will only be
required to submit the schedules or non-standard section to the Registrar
for consideration.
5.
CONVERSIONS
5.1. Change of Fund to from underwritten to privately administered
A fund can be converted from an underwritten fund to a privately
administered fund or vice versa by amending the rules or the submission
of revised rules.
5.2. Benefit Structure
5.2.1.
A fund can be converted from a defined contribution to a defined
benefit fund or vice versa amounts by amending the rules or the
submission of revised rules.
5.2.2.
Where a fund or part of a fund, converts from a defined benefit to
a defined contribution arrangement. The application for the
conversion must be accompanied by a conversion report,
attached hereto as Forms I, II or III of Annexure XXXX.
6.
CONTIGENCY RESERVE ACCOUNTS
RULES OF A FUND RELATING TO INVESTMENT RESERVE ACCOUNTS
Where a fund, with a defined contribution category of membership, allows for
the smoothing of fund return in relation to members’ individual accounts, the
rules of the fund must provide for the operation of such investment reserve
account.
REQUIREMENTS IN TERMS OF CONTINGENCY RESERVE ACCOUNTS
6.1. The rules of a fund must provide for any contingency reserve account
which will be operated by the fund.
6.2. Every contingency reserve account that will be established , at least the
following must be provided for in the rules of the fund:6.2.1.
6.2.1.
6.2.2.
6.2.3.
the nature and specific utilisation of the contingency reserve
account;
an explanation of how the opening balance is to be determined;
the items that will be credited to, and debited from, the
contingency reserve account; and
the manner in which the account will be dissolved, should its
purpose become obsolete.
6.3. Where it is not possible to specify the items to be credited to and debited
from the contingency reserve account (e.g. in the case of a solvency
reserve), it would be acceptable to include the following in the rules of the
fund:
6.3.1.
that the quantum of the account is determined by the board of the
fund in consultation with the valuator at least as at the date of
each statutory actuarial valuation; and
6.3.2. whether or not the balance in the account is accumulated with
fund return.
6.4. It is recognised that the valuator may wish to recommend a contingency
reserve account at the time of doing the valuation. This would then have
to be brought in line with the rules of the fund as the valuator would in
effect be recommending the establishment of a new contingency reserve
account. If this recommendation is accepted by the fund, the rules of the
fund would need to be amended in line with this decision within 12 months
following the submission of the statutory actuarial valuation report to the
Registrar, or earlier in the case of section 14 transfers, where shares of
such reserve accounts are being transferred.
7.
PROCEDURES
7.1. All amendments must be marked clearly in bold print or in such other way
as may be agreed with the Registrar, where replacement pages or
“revised rules” are being submitted. Deletions may be indicated with an
asterix. Where it is not practical to show all the amendments, special
arrangements must be made beforehand with this office.
7.2. In terms of regulation 24(a) (iii) of the Regulations, reasons must be
furnished for every rule amendment. A practice has developed whereby
this office only requests reasons in exceptional cases. This has led to an
unnecessary administrative burden and for this reason you are required to
comply strictly with the above regulation. The reasons may be concise
but must explain the necessity of the amendment.
7.3. In terms of section 12(2), all applications for amendments or “revised
rules” must also be certified by the person managing the business of the
fund as follows:
“It is hereby certified that the resolution attached hereto has been adopted
in accordance with the provisions of the rules of the Fund.”
7.4. For your convenience, this requirement has been combined with the
resolution in the examples attached hereto.
7.5. In terms of section 12(2) read with section 20(2) of the Act, all
documentation submitted to this office must be signed by the following
persons:
7.5.1.
7.5.2.
7.5.3.
the principal officer; and
where the fund is managed by an individual, by that person; or
where the fund is managed by a committee or trustees, by the
chairman and one other member thereof.
7.6. In the case of underwritten funds, until the exemptions from the Act are
withdrawn, documentation may in terms of section 20(2) (c) be signed by
the employer and the underwriter.
7.7. Two copies of the resolution, signed and certified as indicated above,
should be furnished to enable this office to return one endorsed copy to
you.
7.8. Where any amendment affects the financial condition of the fund, a
certificate of a valuator as to the financial soundness should be furnished
in terms of section 12(3). If the method of funding is such that triennial
investigations by a valuator are unnecessary then the Principal Officer (or
Underwriter) must certify financial soundness.
Annexure A
Rule Amendment No. ............
Extract from the minutes of a meeting of the Trustees/Board of the
……………………….. (reference no. 12/8/……...) held at ………………….. on
…………………………………. (*where applicable)
OR
Round Robin resolution, duly authorised, by the Board of the …………………
………………………………Fund, (*where applicable)
Resolved: That rules ..............................of the rules of the above fund with effect
from.......................be amended as follows:
The reasons for the amendment are:
The Trustees/Board of Fund certifies that the above resolution has been adopted in
accordance with the provisions of the rules of the Fund.
…………………..
……………………
………………….
INTERIM BOARD MEMBER
Signature
Date
…………………….
……………………
…………………..
INTERM BOARD MEMBER
Signature
Date
(Full Name & Surname)
(Full Name & Surname)
…………………….
…………………….
PRINCIPAL OFFICER
Signature
(Full Name & Surname)
………………….
Date
Annexure B
Extract from the minutes of a meeting of the Trustees/Board of the
……………………….. Fund (reference no. 12/8/……..) held at ………………….. on
…………………………………. (*where applicable)
OR
Round Robin resolution, duly authorised, by the Board of the …………………
………………………………Fund, (*where applicable)
It is hereby resolved that the Rules of the above fund is hereby replaced, with effect
from ..............., with the Rules attached hereto. The said Rules have been initialled
for identification purposes and any amendments, omissions and/or additions (delete
whichever is not applicable) and the reasons therefore, are set out below:
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
The Trustees/Board of Fund certify that the above resolution has been adopted in
accordance with the provisions of the rules of the Fund.
…………………..
CHAIRPERSON
(Full Name & Surname)
………………………..
Signature
…………………..
Date
…………………….
MEMBER OF THE BOARD
(Full Name & Surname)
……………………
Signature
…………………..
Date
…………………….
PRINCIPAL OFFICER
(Full Name & Surname)
…………………….
Signature
……………………
Date
Annexure C
SPECIAL RULES – ………………. (Name of Participating Employer)
Extract from the minutes of a meeting of the Trustees/Board of the
……………………….. Fund (reference no. 12/8/……../…..) held at
………………….. on …………………………… ……. (*where applicable)
OR
Round Robin resolution, duly authorised, by the Board of the …………………
………………………………Fund, (*where applicable)
Resolved: That in terms of the RULES of the Fund, (…..Name of the Participating
Employer……) be admitted as a participating Employer with effect from (date) …...
The Trustees/Board of Fund certifies that the above resolution has been adopted in
accordance with the provisions of the rules of the Fund.
…………………..
CHAIRPERSON
(Full Name & Surname)
………………………..
Signature
…………………..
Date
…………………….
MEMBER OF THE BOARD
(Full Name & Surname)
……………………
Signature
…………………..
Date
…………………….
PRINCIPAL OFFICER
(Full Name & Surname)
…………………….
Signature
……………………
Date
ANNEXURE D
REVISED SPECIAL RULES – ………………. (Name of Participating Employer)
Extract from the minutes of a meeting of the Trustees/Board of the
……………………….. Fund (reference no. 12/8/……../…..) held at
………………….. on …………………………… …………………. (*where applicable)
OR
Round Robin resolution, duly authorised, by the Board of the …………………
………………………………Fund, (*where applicable)
It is hereby resolved that the set of special rules of the above participating employer
be replaced with effect from…………..and subject to the approval of the Registrar of
Pension Funds that the attached Revised Special Rules be adopted as the special
rules of employer.
The Trustees/Board of Fund certifies that the above resolution has been adopted in
accordance with the provisions of the rules of the Fund.
…………………..
CHAIRPERSON
(Full Name & Surname)
………………………..
Signature
…………………..
Date
…………………….
MEMBER OF THE BOARD
(Full Name & Surname)
……………………
Signature
…………………..
Date
…………………….
PRINCIPAL OFFICER
(Full Name & Surname)
…………………….
Signature
……………………
Date
ANNEXURE E
CONVERSION REPORT – FORM I
REPORT BY THE VALUATOR OF THE ...................................FUND (12/8/……..)
IN TERMS OF THE CONVERSION FROM A DEFINED BENEFIT BASIS OF
FUNDING TO A DEFINED CONTRIBUTION BASIS OF FUNDING
IN ORDER FOR THE FUND TO OBTAIN APPROVAL BEFORE THE EFFECTIVE
DATE OF CONVERSION, AND OPERATE ON A DEFINED CONTRUBTION
BASIS AS FROM THE EFFECTIVE DATE, THIS FORM MUST BE SUBMITTED
BEFORE THE EFFECTIVE DATE OF THE CONVERSION TOGETHER WITH THE
REVISED RULES
………………………………..
1.
Effective date of the conversion:
2.
In the table below, kindly indicate the rule number in the revised rules defining
the required items:
Rule
number
Item
 Initial credits into the members’ accounts
 Investment reserve account (for smoothing of fund returns)
 Contingency reserve accounts
 Mechanism of investment return accrual to members’ accounts
 Mechanism of taking into account expenses when determining the members’ account balances
Notes:
(a)
The conversion cannot be implemented before the revised rules have been approved
by the Registrar.
(b)
Where pensioners are being outsourced in terms of GN18 (i.e. pensions purchased
in their own names) as part of the conversion, a separate application for transfer in
terms of section 14 should be submitted.
(c)
The initial credit to a member’s account may not exceed the maximum of the accrued
liability and the minimum individual reserve in respect of the member if the Registrar
has not approved the surplus apportionment scheme in terms of section 15B.
(d)
Contingency reserve accounts created should be justified in line with the provisions
of Regulation 35, which determines, inter alia, that the establishment and magnitude
of any contingency reserve account by a fund–
(i)
must be motivated by the valuator in the relevant report on the statutory
actuarial valuation; and
(ii)
where the Registrar is not satisfied with any such motivation, be rejected by the
Registrar.
3.
The basis and method used to calculate the initial credits will be as follows:
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
4.
Where a different basis than a best-estimate basis, or the basis used in the
previous statutory actuarial valuation, will be used, the effect of this on the
initial credits will be as follows. In addition, kindly explain the reasons for
using a different basis.
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
5.
The financial position as at the last valuation of the fund was as follows:
Last valuation
Estimate
Date
Value of assets (A)
Value of accrued
liabilities
Reserve Account 1
Reserve Account 2
Etc
Total value of liabilities,
including reserve
accounts (L)
Surplus (A – L)
Funding level (A/L)
If it is expected that there were significant changes to the financial position
since the date of the last valuation, it would be necessary to estimate the
financial position at a more recent date, or at the very least explain in broad
terms and by using general reasoning what the estimated effect would be.
Kindly attach this explanation as an Annexure, or complete the 3 rd column in
the table above.
6.
The actuarial surplus as at the effective date of conversion will be apportioned
as follows:
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
7.
The following contingency reserve accounts will cease to exist immediately
after the conversion, with the respective credit balances being distributed as
follows:
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
.
8.
The following contingency reserve accounts will be created immediately after
the conversion, with the respective opening balances being credited / funded
as follows:
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
............................................................................................................................
9.
In my opinion,
9.1.
In respect of the members and deferred pensioners who convert to a
defined contribution basis of funding, their reasonable benefit
expectations in respect of the rules immediately prior to the conversion
are fairly represented in their initial credits.
OR
The reasonable benefit expectations of the members and deferred
pensioners who convert to a defined contribution basis of funding are
not fairly represented in their initial credits for the following reason:
…………………………………………………………………………………
…………………………………………………………………………………
…………………………………………………………………………………
………………………………....................................................................
(Delete whichever is not applicable).
9.2.
The reasonable benefit expectations of any members, deferred
pensioners and pensioners who remain on a defined benefit basis of
funding have not been detrimentally affected by the credits given to
those members who convert to a defined contribution basis of funding
and the amounts credited to the various reserve accounts.
OR
The reasonable benefit expectations of the members and deferred
pensioners who remain on a defined benefit basis of funding have
been detrimentally affected as follows:
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
(Delete whichever is not applicable).
9.3.
In line with section 14A (1) (c) of the Act, the amount to be credited to
the member’s individual account is not less than the minimum
individual reserve.
9.4.
Explain what will happen should the assets available at the date of
conversion not be sufficient to provide for the conversion credits as
outlined in this document.
.................................................................................................................
.................................................................................................................
.................................................................................................................
.................................................................................................................
DECLARATION
I, in my capacity as valuator appointed in terms of section 9A of the Pension Funds
Act, 1956, to the Fund declare that the information given above is, to the best of my
knowledge and belief, correct and complete.
……………………...……..
Full name and Surname
………………………..
Signature
…………………..
Date
CONVERSION REPORT – FORM II
CERTIFICATE BY THE CHAIRPERSON OF THE BOARD AND THE PRINCIPAL
OFFICER OF THE ...................................FUND (12/8/……..) IN TERMS OF THE
CONVERSION FROM A DEFINED BENEFIT BASIS OF FUNDING TO A DEFINED
CONTRIBUTION BASIS OF FUNDING
IN ORDER FOR THE FUND TO OBTAIN APPROVAL BEFORE THE EFFECTIVE
DATE OF CONVERSION, AND OPERATE ON A DEFINED CONTRUBTION
BASIS AS FROM THE EFFECTIVE DATE, THIS FORM MUST BE SUBMITTED
BEFORE THE EFFECTIVE DATE OF THE CONVERSION TOGETHER WITH THE
REVISED RULES
We hereby certify that:
1.
The requirements of the Pension Funds Act, 1956, as amended, have been
complied with regarding the distribution of surplus.
OR
The requirements of the Pension Funds Act, 1956, as amended, have not
been complied with regarding the distribution of surplus.
(Delete whichever is not applicable).
2.
The members involved in the conversion have been informed of the principles
and basis of conversion, and have accepted the principles and basis as set
out in Form I. In addition, a detailed comparison of the current rules to the
proposed rules, and the impact that it will have on the members have been
explained, with particular reference to the transfer of risks.
Note: A copy of the conversion communication must be attached.
3.
Any objections raised in relation to the conversion have been resolved by the
board.
4.
No member will become entitled to a cash refund of part of the contributions
made by him, or on his behalf, to the fund as a result of the conversion.
5.
We have studied, and are in agreement with the certificate by the valuator,
attached to this application as Form I.
6.
We declare that the information above is, to the best of our knowledge and
belief, correct and complete.
…………………..
CHAIRPERSON
(Full Name & Surname)
………………………..
Signature
…………………..
Date
…………………….
PRINCIPAL OFFICER
(Full Name & Surname)
…………………….
Signature
……………………
Date
CONVERSION REPORT – FORM III
REPORT BY THE VALUATOR OF THE ...................................FUND (12/8/……..)
IN TERMS OF THE CONVERSION FROM A DEFINED BENEFIT BASIS OF
FUNDING TO A DEFINED CONTRIBUTION BASIS OF FUNDING
THIS FORM MUST BE SUBMITTED WITHIN SIX MONTHS AFTER THE EFFECTIVE
DATE OF THE CONVERSION
I hereby certify that:
1.
T
he requirements of the Pension Funds Act, 1956, as amended, have been complied
with regarding the distribution of surplus.
2.
An actuarial valuation, on a defined benefit basis, as at the effective date of
conversion reflects the financial position of the Fund as follows:
Defined Benefit Fund
Fair value of assets
Solvency reserve account
Employer surplus account
Member surplus account
Accrued liabilities:
Existing members who are still in service
Pensioners
Deferred pensioners
Contingency reserve accounts:
Name & rule no (specify)
Name & rule no (specify)
…
Actuarial surplus
R’000
3.
The financial position of the fund immediately following the effective date of
conversion is reflected as follows:
R’000
Defined Contribution Fund
Fair value of assets
Investment reserve account
Employer surplus account
Member surplus account
Accrued liabilities:
Existing members who are still in service:
Pensioners:
Deferred pensioners
Contingency reserve accounts:
Name & rule no (specify)
Name & rule no (specify)
…
Actuarial surplus
4.
In my opinion, the conversion as was presented to the Registrar on ..................
and approved by the Registrar on ............. was given effect to on the basis and
principles as approved. The reasonable expectations that members may have
had following the communication of the conversion have all been met. I would
like to bring the following to the attention of the Registrar:
............................................................................................................................
............................................................................................................................
............................................................................................................................
DECLARATION
I, in my capacity as valuator appointed in terms of section 9A of the Pension Funds
Act, 1956, to the Fund declare that the information given above is, to the best of my
knowledge and belief, correct and complete.
…………………..
Full Name & Surname
………………………..
Signature
…………………..
Date