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Reminder: Annual PAIA reporting for retirement funds due by 30 June 2025

Reminder: Annual PAIA reporting for retirement funds due by 30 June 2025

Retirement funds, as private bodies under the Promotion of Access to Information Act (PAIA), must submit annual reports about their PAIA activities by 30 June 2025. This report details how the fund has processed requests from people asking for information, for the period 1 April 2024 to 31 March 2025.

The Regulator uses these reports to assess overall compliance with PAIA, understand trends in information requests, and gauge public awareness and usage of the Act

The fund’s Information Officer or Deputy Information Officer is responsible for making the submission.

The report must be submitted online through the Information Regulator’s website or directly on the Regulator’s eServices portal on https://eservices.inforegulator.org.za as follows:

Log in with ID number and password
Verify identity with the OTP sent
Click on “Submit annual PAIA reports”
Click on “New submission”
Complete the reporting per relevant body registered on the user’s profile

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FSCA’s Conduct Standard on financial education

FSCA’s Conduct Standard on financial education

We at Axiomatic have always been passionate about financial education (FE).

In a country where only a small percentage of the population is financially prepared for retirement, financial education has become a critical pillar in ensuring the long-term sustainability and effectiveness of retirement funds. Many members lack a clear understanding of how these funds operate, what benefits they provide, and how their personal financial decisions affect their retirement outcomes.

Financial literacy empowers fund members to make informed decisions about contributions, investment choices, and benefit withdrawals. Without this knowledge, individuals may face avoidable risks such as early withdrawals, inadequate contributions, or poor investment decisions — all of which can significantly undermine their financial security in retirement.

We are therefore pleased that the FSCA has issued FSCA Conduct Standard 1 of 2025: Requirements for Financial Institutions Providing Financial Education Initiatives.

The regulation applies to all financial institutions under the FSCA’s oversight that provide FE programs. These include banks, insurers, retirement funds, and other entities offering structured educational efforts, such as workshops, campaigns, or digital content. Random or one-off actions, like a single article or advertisement, don’t qualify – FE must be deliberate and ongoing to fall under this standard.

When is the Standard applicable to retirement funds?

For most retirement funds, the statement that “Random or one-off actions, like a single article or advertisement, don’t qualify” requires additional scrutiny.

The Conduct Standard implicitly states that it is applicable to retirement funds. Where the fund has a formal FE program run by themselves or a third party, there is no doubt that the fund would be subject to the requirements of the Standard.

However, what if a monthly newsletter were distributed to members? A monthly newsletter could constitute FE if same were a structured, ongoing series of educational content with systematic planning and focus on general financial literacy. Given this, it is unlikely that a single newsletter or a monthly newsletter informing members of the performance of their fund would require adherence to the provisions of the Standard. Even if some education is provided, for example, not to panic and make knee-jerk reactions when market volatility is experienced, this could not be considered a structured and ongoing series of FE.

Our opinion is that monthly newsletters as described above would not be subject to the requirements of the Standard.

The purpose and scope of the Conduct Standard

Published on 26 March 2025, this Conduct Standard seeks to enhance financial literacy and financial inclusion in South Africa. With its implementation set for 26 March 2026, financial institutions, including retirement funds, have a year to align with its requirements.

The Standard clearly elucidates what financial education (FE) is:

Financial education (FE) means the process by which financial customers improve their understanding of financial products, financial product providers, financial services, financial service providers, financial concepts and risks and, through objective basic information, instruction and the like, aim to develop the skills and confidence to:

1. become more aware of financial risks and opportunities.
2. Make informed financial decisions.
3. manage their financial affairs more sustainably.
4. know where to go for financial assistance and recourse, or
5. take other effective actions to improve their financial well-being and the financial well-being of those under their responsibility.

The FSCA’s mandate includes protecting financial customers, promoting fair treatment by financial institutions, and fostering financial literacy. The Standard directly supports these objectives by setting baseline requirements for financial institutions offering FE programs. Unlike promotional or product-specific activities, the standard focuses on systematic, non-commercial initiatives designed to equip consumers with the knowledge to make informed financial decisions.

Key requirements: governance, measurability, and consumer focus

At its core, the Conduct Standard emphasises governance and accountability. Financial institutions must establish clear oversight for their FE initiatives, ensuring they align with consumer needs and regulatory expectations. This includes appointing qualified staff to develop and manage programs, with content tailored to the target audience’s literacy levels, cultural context, and financial challenges.

One of the most debated aspects during the consultation process was the requirement for measurability.

Institutions must track the effectiveness and impact of their FE programs, using metrics like participant engagement, knowledge retention, or behavioural changes (for example, increased savings or better budgeting).

In response to stakeholders who expressed concern that this could raise costs, the FSCA introduced flexibility, allowing smaller institutions to adopt simpler evaluation methods based on their size, complexity, and risk profile. For instance, a community-based credit provider might use basic surveys to measure impact, while a large bank could deploy sophisticated analytics. This proportional approach ensures that even modest players can comply without abandoning their programs.

Yes, the consequence is that larger institutions with more resources may deliver polished programs, while smaller ones might struggle to compete. However, the FSCA argues that raising the overall quality of FE will benefit consumers, even if the playing field isn’t perfectly level. We agree- some education is better than none.

The standard also prioritises consumer-centric education. FE initiatives must avoid marketing or promoting specific products, focusing instead on general skills like understanding credit, managing debt, or planning for retirement. By fostering impartial education, the FSCA aims to build trust and empower consumers to navigate South Africa’s complex financial landscape.

Implications for retirement funds

Funds need to examine the criteria for FE contained in the Standard to decide if their communication with members constitutes FE as described in the Standard. If the answer is YES and/or the fund has a structured, ongoing series of educational content with systematic planning and focus on general financial literacy, then with a 12-month transition period, retirement funds must align their FE programs to comply by March 2026.

You will need to review your existing FE programs, establish governance frameworks, and train staff to meet the standards’ requirements.

Alternatively, request your current consultant to set out a program that meets the requirements of the Conduct Standard.

Conclusion

We are of the opinion that this is a welcome initiative by the FSCA. Retirement funds should be enhancing the financial understanding and literacy of their members so that they understand the importance of planning for their retirement.

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FSCA Communication 6 of 2025: The interest on late payment of pension funds

FSCA Communication 6 of 2025: The calculation of late payment interest by pension funds

Up to now, there have been differing opinions on the date from which late payment interest (LPI) is to be calculated on late contributions receipted into a retirement fund. The FSCA, in Communication 15 of 2023, indicated that LPI was to be calculated from the 8th of the month, while the Pension Funds Adjudicator believed it should be calculated from the 1st.

Legal opinions were obtained by both the FSCA and the Pension Funds Adjudicator; however, the two opinions furnished conflicting opinions. The FSCA then sought a third opinion with the intention that this opinion would be the “tie breaker”.

After receiving the “tie breaker” opinion, the FSCA has reconsidered their position and in Communication 6 of 2025 confirms that LPI is to be calculated from the 1st day of the month following the end of the month in respect of which contributions were payable.

For the sake of clarity, a contribution for April is payable within the first seven days of May. Should it not be paid by the 7th of May, the defaulting employer is liable to pay interest at the prescribed rate from the 1st of May until the date of payment of the arrear contributions.

Axiomatic is of the opinion that this approach is correct and welcomes the fact that clarity has now been obtained, and further, that the two regulatory bodies are now aligned.

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Retirement Fund Contributions: Recent Court Ruling

Retirement fund contributions: recent Court ruling

Section 13A of the Pension Funds Act imposes a statutory obligation on employers to pay the retirement fund contributions they deduct from employees in terms of the fund’s rules.

There are two parts to the monthly contribution process:

- The actual contributions due and payable to the fund, and
- The supporting information schedule accompanies the deposit into the fund’s bank account. (In terms of Conduct Standard 1 of 2022: Requirements related to the payment of pension fund contributions).

The company has 7 days from month end to pay the contributions into the fund’s bank account, in other words, February’s contributions must be paid over to the fund by 7 March, at the latest. If contributions are received later than the 7^th, then late payment interest is due. (The date from which late payment interest is calculated is viewed by the FSCA as starting on the day after they were due – in other words, late payment interest is calculated from the 8^th.)

The implementation of the two-pot retirement system in September 2024, spotlighted the seriousness of arrear contributions – given that several members could not access their full savings pot entitlements because their employers had not paid over fund contributions. In fact, as at November 2024, 7 770 employers in the public and private sectors had been reported for failing to make timely pension contributions, with 36% of these cases occurring in the private security sector. The latest data indicated that the total arrear contributions amount to R5.2 billion.

Who is liable for these contributions?

What many employers don’t know is that Section 13A(8) of the Act stipulates that when the employer fails to pay the contributions, the individuals directly involved in managing the entity’s financial affairs shall be held personally liable for payment of the contributions, for example, the board of directors or the members of a CC.

In Section 13A(9) the Act requires that every retirement fund must request, in writing, the employer to advise of any person (or persons) who are so personally liable in terms of subsection (8). And if the employer doesn’t provide this information, then all the directors or members of a CC “shall be personally liable”.

What then constitutes being “directly involved in managing the entity’s financial affairs”?

In January 2025, the High Court of the Western Cape ruled on this in the matter of Engineering Industries Pension Fund and Another v Installair (Pty) Ltd and Others (1633/2023) [2025] ZAWCHC 8.

In this case the second respondent argued that she could not be held personally liable for the outstanding contributions because, although listed as a director, she “was not involved in the affairs of the employer and an order should not be granted against her”.

In his ruling, the Judge found that this assertion could not stand. In summary, he commented that she was a director of the company and had to accept the responsibilities that come with it. He also pointed to the fact that she is listed as a director on the Second Respondent’s own CIPRO search.

Further, the Judge commented: “I would be failing in my constitutional duty if an order is not granted to the vulnerable groups. I reiterate, that my attention is drawn to an article in the media and to the high interest in withdrawal claims from the two-pot retirement system which has exposed the failure of employers to pay pension contributions/s to funds who administer these contributions as envisaged under these unfortunate circumstances.”

There is no denying it, directors have clear personal liability when it comes to failure to pay over retirement fund contributions. Whether a company has its standalone fund or participates in an umbrella fund, those who manage the financial affairs of the business need to make sure that the legal requirements are adhered to, or face personal liability.

Secure Your Employees’ Future – And Yours – Pension contributions must be paid on time to avoid penalties and personal liability.

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THE CONDUCT OF FINANCIAL OF INSTITUTIONS BILL – 2025

THE CONDUCT OF FINANCIAL OF INSTITUTIONS BILL - 2025

To understand the Conduct of Financial Institutions Bill (known as COFI), we need to take a step back and look at the regulatory reform journey South Africa has been on for some time.

In 2018 the Twin Peaks regulatory model was formalised by the Financial Sector Regulation (FSR) Act, to strengthen financial sector regulation and oversight. The Twin Peaks regulatory reform was a direct response to the weakness of the financial services regulatory system revealed by the 2008 global financial crisis, such as inappropriate market conduct and the systemic risks of large insurers.

The FSR Act established the Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA) as the primary regulators, with the former focusing on market conduct and the latter responsible for prudential regulation. As one of the final steps in the Twin Peaks reform process, the COFI bill was drafted in conjunction with the FSR Act and published for comment in December 2018.

At a high level, COFI is an umbrella piece of legislation governing financial institutions, to replace existing industry-specific conduct regulation, where there are many gaps and many overlaps. COFI will streamline and harmonise the legal landscape that financial institutions operate in, by providing a single, holistic legal framework for market conduct regulation in South Africa that is consistently applied to all financial institutions.

At its heart, COFI’s focus is regulating the general market conduct of financial institutions and the fair treatment of customers.

Principles underpinning the COFI bill

- Activity-based approach: There are currently 13 different financial sector laws that regulate and supervise financial institutions. These laws are specific to each institutional definition, for example, retirement funds, financial services providers, etc. The new legal framework under COFI will shift away from this sectoral approach and will focus on the activities being performed instead. In other words, the law will cover the activity, rather than the type of institution.
- Principle-based approach: COFI moves away from a rules-based approach to compliance (tick box exercise) and sees the industry and regulator shifting towards making sure that their actions and processes are geared towards desired outcomes (or the spirit of the law). Financial institutions will thus need to support and uphold principles rather than simply follow rules – and regulators will have wider latitude to supervise the spirit, and letter, of the rules.
- Outcomes-focused approach: Regulators will test institutions on the delivery of the outcomes, but the institutions can decide what processes and actions are required to meet the outcomes.
- Risk-based approach: The new framework enables the regulator to identify and address areas that pose higher risks to customers and financial stability. This approach supports transformation and financial inclusion while ensuring compliance with relevant codes like the B-BBEE Code.

Objectives of COFI

Under COFI, financial institutions will have to comply with the Financial Sector Code. Institutions will have to design, publish and implement a transformation policy, and then report on how they are meeting the set targets.

- Regulate how financial institutions treat their customers, aligning with the Treating Customers Fairly principles.
- Consolidate the existing range of laws applicable to the financial sector
- Promote:
  - trust and confidence in the financial sector
  - innovation
  - competition
  - financial inclusion
  - financial literacy
  - transformation
  - governance
  - Support fair and efficient financial markets

COFI and transformation

Fair treatment of customers

A core objective is to ensure that financial institutions prioritise the fair treatment of customers. This includes designing products and services that meet the needs of identified customer groups and providing clear, understandable information to customers.

Licensing

Currently, the licensing of financial institutions is done on an institutional basis, for example, as a bank or an insurer, etc. The bill proposes a comprehensive licensing schedule for all regulated entities and envisages that a financial institution carrying out one or more identified activities will have to be authorised for each activity. A licence will be granted on three levels: activity being performed, product involved and targeted customer.

The proposed licensing requirements emphasise the importance of robust governance structures within financial institutions, including the appointment and debarment of representatives.

COFI and retirement funds

It has been proposed that initially, retirement funds will have to be licensed under both the Pension Funds Act (PFA) and COFI to ensure consistency in the way customers are treated. Over time, conduct requirements will however be shifted from the PFA to COFI.

Retirement fund administrators and other service providers currently regulated under the PFA, will, in future, only be licensed and authorised under COFI. There will be a transitional period to ensure alignment between the provisions of the PFA and COFI.

Boards of management of retirement funds will remain responsible and accountable for compliance with all applicable legislation as part of their wider fiduciary duties. Given this important function, boards will have to comply with certain fit and proper requirements to be prescribed by the FSCA under COFI, which will be issued as conduct standards.

A trustee who is elected by the employees, the participating employer or the fund’s sponsor will not be required to be licensed under COFI. Professional or independent trustees will however have to be licensed and will also be subject to fit and proper requirements as part of their wider regulatory obligations.

The Financial Sector Code currently only applies voluntarily to the top 100 retirement funds. If these transformation principles are now made law under COFI, it could mean that all retirement funds will have to comply with the transformation requirements prescribed by the Code.

Retirement funds can also expect enhanced supervision. The FSCA will adopt a more proactive and intrusive supervisory approach, which may include desktop reviews and on-site visits for high-impact funds. This could lead to more rigorous oversight and enforcement of compliance standards

Overall, COFI will require trustees to be more proactive in ensuring that their governance practices, decision-making processes and operational systems align with COFI’s objectives of fairness, transparency, and customer protection

When will COFI be published?

In their latest 3-year regulation plan, the FSCA confirmed that the development of a “holistic, cross-sector, robust, and customer-focused regulatory framework” under COFI remains a top priority. The COFI bill is a critical development that will shape the future conduct framework, and many of the FSCA’s current conduct regulatory framework projects have some dependency on its promulgation.

Given the sweeping changes by COFI, it is expected that the FSCA will follow a phased approach to its implementation:

- Phase 1: The initial high-level design of the new regulatory framework, which will inform the development of the underlying regulatory frameworks.
- Phase 2: Targeted consultation on the themed frameworks.
- Phase 3: Transition the regulatory instruments under the existing sectoral laws into COFI.

To date, no firm dates have been provided. The FSCA has confirmed that “Timelines for completion are outside of their control but support will continue as long as necessary.”

In the interim, the FSCA will regulate financial institutions using conduct standards.

In summary …

COFI is a significant piece of legislation in South Africa aimed at reforming and strengthening the regulation of financial institutions, aligning with global best practices. It seeks to enhance the existing regulatory framework by:

- focusing on the conduct of financial institutions,
- ensuring fair treatment of customers, and
- promoting financial stability.

COFI is part of a broader effort to enhance South Africa’s financial regulatory environment and aims to create a more transparent, efficient and customer-centric financial sector. The implementation of this bill will require significant changes in how financial institutions operate, including retirement funds.

COFI is set to reshape South Africa’s financial sector. Stay ahead—assess your compliance strategy and prepare for the changes. Need guidance? Get in touch today!

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