The Financial Sector Conduct Authority last week withdrew the temporary exemption from using the prescribed application forms for approving amalgamations and transfers of retirement fund benefits.
The exemption was granted in August last year and remained in effect until the amendments to Conduct Standard 1 of 2019 had been finalised.
The Authority, in a communication published on 28 March 2025, said the Conduct Standard Amendment is now in effect.
Conduct Standard 1 of 2019 (PFA) sets out the conditions and requirements for amalgamations and transfers under section 14 of the Pension Funds Act (PFA). The Standard provides guidelines and procedures that retirement funds must follow when applying for amalgamations or transfers, including the completion of application forms and compliance with regulatory standards.
In terms of the two-pot retirement system, retirement funds must distinguish between three components: a vested component (contributions plus fund interest as at 31 August 2024), a savings component (one-third of contributions from 1 September 2024), and a retirement component (two-thirds of contributions from 1 September 2024).
Members can transfer between the different components within the same fund (subject to limitations) and between different retirement funds.
Conduct Standard 1 of 2019 did not align with the two-pot regime because the application forms allowed for a single transfer value only. In terms of the pot system, section 14 forms must differentiate between the different components to be transferred. As such, the section 14 application forms had to be revised.
This resulted in the FSCA in May 2024 publishing for public consultation the Draft amendments to FSRA Conduct Standard 1 of 2019 (PFA) – Conditions for amalgamations and transfers in terms of section 14 of the PFA.
The draft amendments proposed:
- removing the section 14 application forms from Conduct Standard 1 of 2019; and
- enabling the FSCA to determine the manner of submission, content, and format of the section 14 application forms in line with section 108(2) of the Financial Sector Regulation Act (FSRA).
In June 2024, as a parallel process to the consultation on the amendment to the Conduct Standard, the FSCA published a draft determination, with the proposed forms attached to it for public consultation. A total of 66 comments from six commentators were received on the revised forms, and the FSCA engaged the commentators on a bilateral basis to clarify the proposals made.
Read: FSCA sets out how benefit transfers must be effected during transition to two pots
In a communication issued in August, FSCA deputy commissioner Katherine Gibson said it was unlikely that the amended Conduct Standard would be in effect by 1 September 2024, when the two-pot system was introduced, because the consultation process prescribed ty the FSRA would not have been concluded.
Therefore, as an interim measure, the FSCA on 29 August published RF Notice 18 of 2024 exempting retirement funds from using the application forms prescribed in Conduct Standard 1. This general exemption was subject to funds using the new revised forms appended to the exemption Notice.
Stakeholders were advised that the exemption would apply pending the finalisation of the prescribed consultation process on the Conduct Standard Amendment, and the exemption would be withdrawn once the amendments had been finalised and the determination was published on the FSCA website.
Read: Retirement funds get exemption from using prescribed section 14 transfer forms
On 28 March 2025, the FSCA published:
- Conduct Standard Amendment 1 of 2025: Amendment to FSRA Conduct Standard 1 of 2019 (PFA) – Conditions for amalgamations and transfers in terms of section 14 of the PFA
- RF Notice 5 of 2025: Determination of forms for applications in respect of amalgamations and transfers in terms of section 14 of the PFA
The Authority formally withdrew RF Notice 18 of 2024 on the same date.
To download the Conduct Standard Amendment and the Determination, go to www.fsca.co.za > Regulatory frameworks > Standards > Retirement funds > Conduct standards > Conduct Standard 1 of 2025
