The Financial Sector Conduct Authority is exploring a value-for-money framework for retirement funds as part of a broader shift from compliance-based supervision towards assessing the outcomes members receive.
The work reflects growing concern about the effect of costs, fees, and inefficiencies on retirement savings, as well as the difficulty members face in assessing whether the benefits and services they receive justify what they pay.
Zareena Camroodien (pictured), divisional executive for retirement funds supervision at the FSCA, told the Institute of Retirement Funds Africa conference on 8 September 2026 that there had been a decisive shift from compliance-based supervision to outcomes-based regulation. What mattered, she said, was “the outcomes that are achieved for members, not simply a compliance or tick-box approach”.
The FSCA is considering its approach against a broader international debate about how retirement arrangements should be assessed and whether they deliver sufficient value to members.
Why value for money has become a priority
Camroodien said two issues had come sharply into focus within the broader shift towards outcomes-based regulation: value for money and unclaimed benefits.
Although these were not new issues, they had taken on renewed urgency for several reasons. Costs, fees, and inefficiencies could significantly erode retirement savings over time, while many members remained insufficiently engaged with their retirement savings.
Camroodien said complexity, limited transparency, and limited financial literacy contributed to poor engagement. Although the two-pot retirement system had increased engagement with retirement savings, she said member engagement was still below the level the FSCA wanted to see.
This disengagement could contribute to poor outcomes through inappropriate investment strategies, excessive costs, benefits that were never claimed, or members’ inability to interrogate the costs they paid.
Camroodien said South Africa’s retirement savings system faced a range of challenges, including a fragmented and high-cost market, lower-than-desired member engagement, heavy reliance on default options, employer-driven fund selection, and information that was difficult to compare.
These issues were particularly important in a system that relied heavily on defined-contribution arrangements, where members bore most of the investment, longevity, and decision-making risks.
What value for money means
These domestic concerns form part of a broader international debate about how retirement arrangements should be assessed.
Camroodien referred to the International Organisation of Pension Supervisors’ 2025/26 programme of work, which includes a project on transparency, benchmarking, and value for money.
The project aims to help retirement supervisors improve member outcomes, transparency, comparability, and market efficiency by developing frameworks to assess whether pension arrangements deliver good value relative to their costs and risks.
Camroodien said there was no single global definition of value for money. The central question was whether “the costs charged [are] justified by the overall benefits delivered to members over the long term”.
She said IOPS had identified three systemic issues that could undermine value for money: low member engagement, fragmented information, and the agency problem associated with employer-driven fund selection.
Information about returns, costs, and services could be disclosed separately, making it difficult to form an overall view of whether a retirement arrangement delivered value.
The agency problem arose where employers selected funds for workers without direct accountability for those decisions.
Camroodien said a value-for-money framework could contribute to improved outcomes by improving transparency around investment performance, fees, and service quality; strengthening competition among providers; supporting consumer protection; helping supervisors identify underperforming funds; and addressing agency problems.
How a holistic system could work
In explaining the international approach, Camroodien said IOPS had identified five key components of a holistic value-for-money system.
The first was the scope of the assessment, including which entities and funds should be compared. Comparisons needed to be between similar arrangements, such as umbrella funds and other umbrella funds, rather than between fundamentally different types of funds.
The second was the use of standardised metrics that were comparable, consistent, and based on reliable data. Camroodien said these metrics fell into four broad categories: investment performance, costs and charges, quality of service, and suitability.
A third component was benchmarking and comparative assessment, using measures such as standard portfolios or comparisons with peer groups and similar funds.
The fourth was transparent disclosure and member communication. Results should be published clearly and regularly, in language that was simple, understandable, and easy to digest.
The fifth was regulatory action and consequences. Camroodien said a value-for-money framework would have little impact without enforcement.
Camroodien identified Australia, Hong Kong, China, and Mexico as jurisdictions with comprehensive value-for-money frameworks.
The United Kingdom was also well advanced in developing such a framework.
Many other countries had what she described as implicit value-for-money measures, including fee caps, governance requirements, disclosure rules, consumer protection, and investment rules.
This international experience provides the context for the FSCA’s own exploratory work.
The proposed South African approach
The FSCA is exploring the development of its own value-for-money framework for retirement funds. Camroodien said the work would draw on key elements of the Australian and UK models to develop an approach suited to South Africa’s retirement-fund landscape.
The FSCA intended to apply a transparent, outcomes-focused methodology.
Camroodien said the framework would draw on formulas and indicators already widely used in South Africa, including Return on Investment and the Total Expense Ratio, to promote practicality, comparability, and ease of implementation.
The approach was intended to promote consistency in evaluating member outcomes, support stronger governance, and drive meaningful improvements in cost efficiency and investment performance across retirement funds.
The FSCA has not yet set out a final framework or confirmed its detailed methodology, metrics, disclosure requirements, or regulatory consequences. Its current work remains exploratory and subject to the regulator’s internal processes.
