Secondary

Boards of Retirement Funds – Expiration of term of office not part of FSCA mandate

In a recent communication the FSCA reminded all Boards of retirement funds and their administrators of the binding force of a fund’s rules in terms of section 13 of the Pension Funds Act, 1956, and in particular the impact thereof in respect of a Board’s terms of office.

According to the communication the FSCA has been inundated with requests for extension of Boards’ terms of office. “The majority of these requests are made as a result of the impact of the Covid-19 pandemic and the current national lockdown regulations, which make member elections of board members challenging,” the FSCA remarks.

The Communication notes that Section 279(1) of the Financial Sector Regulation Act, 2017 provides that: “A financial sector regulator may, for a valid reason, extend any period for compliance with, or a period prescribed by, a provision of a financial sector law, other than a provision that the financial sector regulator must comply with.”

Furthermore, the PFA does not prescribe terms of office for Boards of retirement funds, instead this is prescribed in terms of funds’ rules. Hence, the Authority is not empowered by law to extend the terms of office of Boards of retirement funds.

Given the challenges posed by Covid-19, Boards of retirements funds should, where their terms of office have expired and they are unable to constitute a proper board or fill a vacancy within 90 days following the date on which the vacancy arose (as prescribed in FSB Notice 3 of 20162 ), apply to the Authority in terms of section 26(2) of the PFA to appoint board members to make up the full complement or quorum of the board. Retirement Funds are kindly reminded to submit any such applications in terms of section 26(2) of the PFA to the Authority via the Authority’s online platform.

Click here to download FSCA Communication 45 of 2020 (RF).

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