The Financial Sector Conduct Authority has published a Notice that relaxes certain retail retirement funds from the requirements of section 14(1) of the Pension Funds Act (PFA) for amalgamations and transfers, subject to specific conditions.
Section 14(1) sets out the requirements with which funds must comply before they can merge (amalgamate) or move money and members to another fund (transfer).
The conditional exemption in RF Notice 8 of 2025 applies to retail funds, defined as retirement annuity (RA) funds, pension preservation funds, and provident preservation funds. These funds are exempt from the requirements of section 14(1) for the following types of transfers:
- Transfers between RA funds.
- Transfers between preservation funds (pension or provident).
- Transfers from a preservation fund to an RA fund.
The exemption is subject to the conditions outlined in paragraph 4 of Notice 8. These are:
- Both funds must maintain transaction records, available to the FSCA upon request.
- Transfers must comply with the rules of the involved funds.
- The relevant FSCA forms must be completed and certified.
- Documentation must include proof of communication of the proposed transaction, resolution of objections, and compliance with section 15B of the PFA (surplus schemes), where applicable.
- Assets and liabilities must be transferred within 180 days from the effective date.
- Transferred assets must be adjusted (increased or decreased) with the fund return from the effective date to the final settlement date.
Notice 8 of 2025 took effect on the date of publication, 14 July 2025.
The publication of the Notice follows a public consultation process.
In April this year, the FSCA released Communication 8 of 2025 (RF), which published the draft exemption notice for comment.
The Authority’s rationale for the exemption was to address the administrative complexities of section 14(1) while ensuring member protection through conditional leniency.
The FSCA received 15 comments from four commentators, including the Institute for Retirement Funds Africa (IRFA), the Association for Savings and Investment South Africa (ASISA), Prescient, and Old Mutual Wealth.
The two main themes in the comments were:
- confusion arising from references to section 14(8) of the PFA in the draft Notice; and
- requests for a blanket exemption from section 14 for retail fund transfers.
The FSCA addressed these concerns in the final Notice and provided detailed responses in the Comments Matrix.
References to section 14(8)
Commentators, notably ASISA and IRFA, raised concerns about the draft Notice’s reference to section 14(8) of the PFA, which governs transfers completed within 180 days without FSCA approval. They argued this reference caused confusion, because the exemption’s intent was to relax the section 14(1) requirements – specifically, the need to submit a scheme to the FSCA – subject to conditions similar to those under section 14(8).
Commentators recommended removing the section 14(8) reference from the Notice or moving any comparison to an explanatory communication to avoid misinterpretation.
The FSCA acknowledged the confusion caused by referencing section 14(8). The final Notice 8 of 2025 removes all references to section 14(8).
The FSCA explained in Communication 14 of 2025 (RF) that the initial inclusion of section 14(8) was because of the similarities in the risk profiles motivating the exemption.
The FSCA further clarified in the Comments Matrix that the exemption does not extend section 14(8) processes or allow extensions beyond 180 days; instead, it requires transfers to be completed within 180 days, or the full section 14(1) process applies.
Why only a partial exemption?
Commentators questioned why retail-to-retail transfers, transfers pending valuation-exemption approvals, or those falling outside the 180-day window remained subject to the section 14 requirements. They advocated for a blanket exemption, allowing these transfers to be processed as withdrawals with a recognition-of-transfer (ROT) process, similar to paragraph 18 of FSCA Conduct Standard 1 of 2019, which covers accrued benefit transfers.
Prescient specifically proposed treating retail fund transfers as withdrawals or, alternatively, using a simplified Form H under section 14(4) requiring only the principal officer’s signature.
They also sought clarity on the process for non-valuation-exempt retail funds, arguing that these transfers, being voluntary and member-initiated, should not require section 14 oversight.
The FSCA rejected the call for a blanket exemption, for two main reasons.
The exemption is conditional on transferring assets and liabilities within 180 days from the effective date, as specified in paragraph 4(e) of the Notice. If this deadline is not met, the fund loses the exemption and must comply with the full section 14(1) process, ensuring timely completion to protect members.
Retail-to-retail transfers (for example, RA to RA, RA to preservation fund, or preservation to preservation) involve transferring fund assets or business, including ongoing membership and liabilities, not accrued member benefits. Unlike withdrawals under paragraph 18 of Conduct Standard 1 of 2019, which apply to payable benefits, these transfers fall under section 14, requiring oversight to prevent risks such as delayed or frozen benefits.
The FSCA said in Communication 14 that members might transfer because of reasons such as investment performance or fund consolidation, not because benefits have accrued, and the liability remains with the fund.
In the Comments Matrix, the FSCA clarified that transfers to RA or preservation funds from other fund types may fall under section 13A(5) of the PFA (using the ROT process), but transfers between retail funds involve ongoing membership, necessitating section 14 oversight.
Prescient’s proposal for a single-signature Form H was rejected, because it would conflict with the governance requirements under section 7(2) and Regulation 20 of the PFA, which mandate proper oversight.
