The Financial Sector Conduct Authority has withdrawn the Financial Services Board (FSB) Pension Fund Circular PF No. 127. This action comes after more than two decades since the original publication of the circular, and the has FSCA determined that the provisions outlined in the circular are no longer relevant.
Circular PF No. 127 was published by the FSB on 16 March 2007. The primary purpose of the circular was to guide administrators, retirement funds, and insurers that underwrite retirement funds on the process of surplus submissions in certain situations. Specifically, the circular addressed the following scenarios:
- Section 14 transfers: This pertains to cases where a retirement fund had transferred all its assets, liabilities, and members in terms of section 14 of the Pension Funds Act (PFA).
- Funds consisting exclusively of unclaimed benefits.
- Funds without a properly constituted board of management.
The circular clarified the categorisation of funds that had effectively ceased to exist and provided guidelines on surplus submissions, with a focus on the requirements for funds that would not be required to submit surplus apportionment schemes. It also addressed funds that lacked a properly constituted board of management, advising administrators to apply to the FSCA for the appointment of an authorised person to act on behalf of the fund.
Circular PF No. 127 was designed to facilitate the deregistration process for retirement funds that were in the process of termination as of 7 December 2001. These funds, which had no remaining assets or liabilities, were exempt from the investigations and certifications typically required for surplus apportionment scheme submissions. By providing this exemption, the circular aimed to streamline the process, allowing these funds to complete their termination and deregistration without unnecessary delays.
At the time of its publication, the circular addressed an urgent issue for retirement funds involved in terminations, providing clarity on how to handle surplus apportionment in cases where funds had ceased to exist or had minimal operations.
As of 2024, more than 20 years have passed since the publication of Circular PF No. 127. During this time, most funds that were in the process of termination as of 7 December 2001 should have completed their deregistration process. These funds, having already cancelled their registrations, are no longer active entities that need to adhere to the provisions outlined in the circular.
The FSCA’s decision to withdraw Circular PF No. 127 is based on the fact that the circumstances it addressed no longer apply to the vast majority of funds.
The Authority, in Communication 42 of 2024, states that any fund that has not completed its deregistration process should now comply with the full requirements of the PFA. This includes ensuring that any remaining assets and liabilities are handled fairly and in accordance with the law.
The withdrawal of the circular signals that the regulatory framework has evolved, and that funds still in existence must adhere to the standard regulatory processes for managing retirement funds. The FSCA’s action aligns with its efforts to ensure that the retirement fund sector operates transparently and in full compliance with the legislative framework.
