The Office of the Pension Funds Adjudicator (OPFA) is proposing to increase its levy for the 2025/26 financial year by 4.7%. If implemented, the increase will result in retirement funds paying R10.87 per eligible member instead of R10.38.
The proposed increase will ensure that legislative changes are implemented optimally to achieve “an improved, independent, and more effective alternative dispute resolution mechanism”, the Office said in a document setting out its proposed budget for 2025/26.
The commencement last year of the Financial Sector and Deposit Insurance Levies Act, and the concomitant changes to the Pension Funds Act (PFA), made the OPFA independent of the FSCA in respect of its funding and accounting functions.
The Levies Act provides for the imposition of levies on supervised entities to fund the OPFA per the amended section 30R of the PFA.
The Financial Sector Regulation Act (FSRA) provides that the OPFA may impose levies in accordance with the FSRA, read with the Levies Act, to fund its operations.
The formula in Table E in Schedule 5 to the Levies Act sets out how the OPFA levy must be calculated.
The formula comprises a base amount and a variable amount. The OPFA does not propose to increase the current base amount of R0.
The variable amount (currently R10.38) is multiplied by the number of eligible retirement fund members, or “L”. These are members and other persons who receive regular payments from a retirement fund as reflected in the fund’s latest annual financial statements submitted to the FSCA on 28 February of the preceding levy year. Beneficiaries and members with unclaimed benefits are excluded.
The number of eligible fund members (L) was reported to be 10.9 million as at 28 February 2024, which is an increase from 10.8 million in the prior year.
There is no cap on the levy that an entity may pay to the OPFA.
The OPFA said the proposed 4.7% increase is expected to be within the estimated average Consumer Price Index (CPI). Therefore, the Minister of Finance will not have to submit the proposed increase to Parliament for approval per section 10(1)(a) of the Levies Act. The minister is required to seek Parliament’s approval for a levy increase if it is higher than CPI.
In 2024/25, the OPFA hiked its levy by 35%, from R7.70 to R10.38 per eligible member.
The Levies Act allowed the OPFA to raise a special levy in the first two years of its enactment to cover establishment costs. The 2024/25 year was the last in which the special levy could be raised.
Budget proposals
The OPFA is required to raise sufficient levies to cover its operational requirements and shall not, as a general principle, budget for a surplus or deficit unless prior approval is obtained from National Treasury.
For the 2025/26 financial year, the OPFA is budgeting for gross revenue of R113 million (2024/25: R108m), operational expenditure of R106m (R100m), and capital expenditure of R7m (R8m). The gross revenue is compromised almost exclusively of levy income.
The operations expenditure of R106m comprises staff expenditure of R65m (2024/25: R62m) and general expenditure of R41m (R38m).
As a percentage of total expenditure, staff expenses represent 58%, general expenditure 36%, and capital expenditure 6% of the total expenditure budget.
Click here to download the OPFA’s budget and levy proposals for 2025/26.
Submissions on the proposals must be made on the comments template and sent to levycomments@pfa.org.za by 31 October.
