The importance of accurate and up-to-date data as foundational to effective regulation, compliance, and member protection was emphasised by FSCA departmental head Zareena Camroodien (pictured) in a presentation to the Institute of Retirement Funds Africa (IRFA) conference on Tuesday.
Camroodien heads the fund governance and trustee conduct department in the FSCA’s Retirement Funds Supervision Division. Her presentation provided a comprehensive overview of regulatory developments, supervisory priorities, and strategic goals affecting the retirement sector.
Conduct Standard for benefit administrators
Conduct Standard 2 of 2025 addresses the regulation of pension benefit administrators. Published on 6 August, the Standard replaces the outdated Board Notice 24 of 2002.
Read: FSCA publishes final Conduct Standard for benefit administrators
Camroodien said the Standard is a conduct-focused and outcomes-based framework that applies to all benefit administrators performing administrative functions on behalf of retirement funds.
A feature of the Conduct Standard is its proportional application, tailored to the nature, size, complexity, business model, and conduct risk of each administrator. Where the Standard’s provisions conflict with the Insurance Act or Banks Act, those statutes take precedence.
Administrators and key persons must meet standards of honesty, integrity, competence, and good standing – a requirement that Camroodien underscored as of critical importance.
“We can have Rolls-Royce legislation and regulation, but unless we get the basics right […] then all things will fall apart.”
Administrators must notify the FSCA of changes in business details or personnel and provide reasons for terminations within 30 days. Administrators must adopt conflict-of-interest policies and report material conflicts. The Standard mandates comprehensive service level agreements (SLAs) to prevent member prejudice.
“We also require service level agreements before the administrator does work, because what could potentially happen is that if they start before the agreements are in place, there may be charges that you may not have anticipated, and of course, that is very and highly prejudicial to members, which we cannot countenance,” Camroodien said.
Additionally, formal complaints frameworks, minimum record retention periods, and data management obligations are required.
“If you don’t have clean data, it becomes very unworkable. How do you keep proper records without proper data and clean data management?”
Compliance with the Conduct Standard is phased. Some provisions are effective immediately, while governance elements such as conflict-of-interest management and complaint-handling frameworks have a six-month window. More complex areas, such as SLAs, administration agreements, and outsourcing oversight, take effect in 12 months.
Impact of COFI
The Conduct of Financial Institutions (COFI) Bill represents a paradigm shift in regulatory oversight.
Camroodien acknowledged that the industry has heard repeatedly that the Bill’s enactment is imminent, “but please bear with us, because I think it’s now truly imminent”.
COFI will have far-reaching implications for the FSCA’s mandate, which will be extended to supervise public sector funds, such as the Government Employees Pension Fund.
The Authority has already had engagements with National Treasury and with some of the public sector funds, “and these engagements will be ongoing, so that when COFI is enacted, that transition will be seamless”.
A notable change is the extension of FSCA oversight to employers, albeit to a limited extent. This will be particularly relevant in addressing the problem of arrear contributions.
Camroodien implored administrators and self-administered funds to maintain up-to-date employer data for sharing with the FSCA, saying that without such co-operation, supervising thousands of employers will be “quite a mammoth” task.
Consolidation and liquidations
Camroodien said the total number of active funds was 858 this month, compared with 1 329 in January 2024. Funds in various stages of termination rose from 3 541 to 3 696 over the same period. Total registered funds dropped from 4 870 to 4 554.
The reduction in the number of funds does not equate to fewer fund members, but rather reflects “organic” consolidation, often into umbrella funds.
As of August, 1 424 funds have applied for cancellation, 455 funds are in liquidation, and 1 507 funds are in the process of terminating.
Turning to liquidations, Camroodien identified the main challenge as the outsourcing of unclaimed benefits.
The Division has engaged liquidators about outstanding liquidation and distribution (L&D) accounts.
A deadline has been communicated to liquidators to “ramp things up”, failing which notification letters will be submitted for long-outstanding and then final L&D accounts.
“And what’s the impact of this? You won’t be allowed to take on new liquidations. So basically, we’ll halt it until the backlogs are cleared, or whether sufficient progress has been made in this regard,” Camroodien said.
The FSCA will hold a webinar on liquidations, probably in September.
Prudential supervision
On prudential supervision, Camroodien said “a sector approach” will be adopted on penalty waivers and reductions. The same approach will be adopted on extensions because the Authority deems six months post-year-end sufficient for the submission of annual financial statements.
Once COFI is enacted, that period will be contracted to four months, “so you might as well get all your ducks in a row so that the FSCA doesn’t end up with a plethora of extensions”, she said.
Trustee Training Toolkit and non-compliance
It mandatory for trustees to complete the Trustee Training Toolkit (TTK) within six months of appointment.
The FSCA issued a request for information on TKK completion in October last year. The Authority has cross-referenced what it received from the RFI with what is on the TTK platform.
Alarmingly, 1 252 trustees, or 20% of trustees of active funds, have not completed the TKK, prompting the issuing of letters under section 26(4) of the Pension Funds Act, which empowers the FSCA to remove a trustee from a board.
Camroodien said the FSCA has received 202 exemption applications, and 252 extension applications. Regulatory action against the remaining trustees will start in September.
Unclaimed benefits and fund expenses
Unclaimed benefits remain a significant challenge, largely because of data quality issues.
“Again, the importance of clean data, because I think that’s a big problem as to why one cannot basically reunite these unclean benefits with members or beneficiaries – it’s a data issue,” Camroodien said
The FSCA will be cleaning up and enhancing its unclaimed benefits database. It will engage with National Treasury and industry and labour on its proposals for tackling the problem.
On retirement fund expenses, Camroodien reiterated the FSCA’s intention to scrutinise expenses, such as administration and investment costs, over the course of the next year.
Strategic goals and division restructuring
Camroodien concluded her presentation by outlining the FSCA’s strategic goals and the restructuring of the Retirement Funds Supervision Division.
The winding down and cancellation of terminating funds will be a major focus over the next three years. “We’d like to clean out the system within two to three years of these terminating funds.”
She said the FSCA wants to focus increasingly on compliance by active funds and their participating employers and administrators, noting there are 7 700 employers whose contributions are in arrears.
Another strategic priority is ensuring that the data in the register is up to date and correct, which is important preparation for the Integrated Regulatory System and risk-based supervision.
“We’ve moved from a compliance-based to a risk-based supervisory approach, which is also quite data-driven. So again, as you can see, the golden thread is ‘have clean data’.”
The Authority will be reviewing the supervisory framework for the retirement sector to ensure it is aligned with the FSCA’s broader supervisory framework, and it is appropriately tailored to active funds and administrators.
Other strategic goals are:
- Implementation of the cybersecurity Conduct Standard, for which external expertise will be engaged.
- Ongoing preparation for COFI.
- Managing the transition of the prudential function to the Prudential Authority (PA). The change was supposed to happen in April next year, but it has been postponed to a date yet to be determined.
Turing to the division’s restructuring, Camroodien said the aim is to improve the focus on supervision, from both a conduct perspective and a prudential perspective. Essentially, the goal is to align structure with focus.
The dedicated terminations team will become a department that also handles section 14 transfers and liquidations. The change is scheduled for 1 October.
The other departments in the Division will be:
- Registration of funds, employers, trustees, and rules.
- Legal and policy support (provisional name).
- Frontline conduct supervision of funds, administrators, and employers.
- Frontline prudential supervision.
- Actuarial and risk support.
The latter two departments will ultimately, in line with the Twin Peaks model, be moved to the PA.
