In the final quarter of 2025 and early into 2026, several material legal and regulatory developments have emerged that directly affect the retirement funds sector. Staying informed about these changes is essential for industry participants.
The following update outlines some of the important legal and regulatory developments.
FSCA Omni Risk Return (FSCA Communication 19 of 2025)
The FSCA has published a draft “Omni-Risk Return” together with an explanatory guide. The Omni Risk Return replaces the previous “Omni Conduct Return” published during 2022 for consultation. The Omni Risk Return will be required to be completed by every financial institution – including retirement funds. The Omni Risk Return is intended to feed into the FSCA’s Integrated Regulatory Solution (IRS)’s automated risk model to create a single, consolidated risk profile for each financial institution, regardless of how many licences it holds or the number of sectors in which it operates.
The proposed data required from financial institutions includes:
- Group Structure, Ownership and Shared Services
- Geographical Presence
- Governance
- Nature of Customer Base and Politically Exposed Persons
- Handling of Customer Assets
- Transaction Volumes, Distribution Channels and Composition
- Product and Agreement Terminations
- Advertising & Communication
- Complaints Management
- IT and Data Governance and Protection of Information
- Outsourcing and Organisational Capacity/ Skills
- Financial Data
The FSCA hosted a number of webinars to explain what is required in terms of the Omni Risk Return and industry submissions were due by 30 November 2025. The FSCA in its communication confirmed that “financial institutions are not expected to initiate or progress any internal Omni Risk Return related initiatives or system development and implementation efforts until further communication is issued on the roll-out of the IRS and Omni-Risk Return”.
PA and FSCA Joint Report on Artificial Intelligence in the South African Financial Sector
During November 2025 the Financial Sector Conduct Authority and the Prudential Authority jointly published their inaugural report Artificial Intelligence (AI) in the South African Financial Sector. The report provides the first comprehensive overview of AI adoption, including machine learning and generative AI, within South Africa’s financial institutions.
Informed by a survey of banks, insurers, pension funds and investment managers that was conducted in 2024, as well as global developments, the report reveals a steady increase in AI usage. The report highlights key opportunities to improve data analytics, operational efficiency and cybersecurity measures. However, it also identifies significant risks, including consumer risks such as data privacy concerns, bias and discrimination, reputational risks and systemic vulnerabilities. Constraints to broader adoption include regulatory uncertainty, shortages of skilled professionals and difficulties with explainability and governance.
As a next step, the FSCA and PA will create a discussion paper to address main regulatory issues, building on their joint AI research, and align with the national AI strategies while coordinating with other financial sector regulators.
Extension of Transitional Arrangements of the Prudential Regulation of pension funds, collective investment schemes (CIS) and friendly societies
The Minister of Finance has granted a final extension of the transitional arrangements governing how certain sectors are supervised under the Financial Sector Regulation Act:
- Pension Funds and CISs until 31 March 2028
- Medical Schemes until 31 March 2029
This means the FSCA will continue with the prudential supervision and regulation of pension funds and CIS until 31 March 2028, whereafter the Prudential Authority will be responsible. The PA and FSCA issued Joint Communication 5 of 2025, which states this extension is aimed at facilitating an orderly and effective transition to and development of fit-for-purpose regulatory and supervisory frameworks for these sectors. Collaborative work between the PA and FSCA is underway and will be communicated to industry as the transitional arrangement plans evolve.
Withdrawal of the 2003 Determination that exempted employers from the application of section 34A of the Basic Conditions of Employment Act (BCEA)
The Minister of Employment and Labour has withdrawn a variation notice which excluded the application of section 34A of the Basic Conditions of Employment Act (BCEA) to employers and employees in respect of the payment of contributions to any benefit fund (retirement fund) regulated under the Pension Funds Act, with effect from 13 January 2026.
In terms of s34A BCEA an employer that deducts any amount from an employee’s remuneration for payment to a benefit fund (retirement fund) must pay the amount to the fund within seven days of the deduction being made. These timeframes may result in a discrepancy with requirements set out in section 13A(3) of the Pension Funds Act, which requires relevant contributions to be transmitted to the fund not later than seven days after the end of the month for which the contribution is payable.
The withdrawal of this Determination means employers who fail to pay over retirement fund contributions within the prescribed time frames are subject to dual enforcement under:
- The Pension Funds Act: Non-payment is a criminal offence punishable by a fine of up to R10 million, imprisonment for up to 10 years, or both. Directors and senior management can be held personally liable under section 13A(8).
- The BCEA: Labour Inspectors can issue compliance orders and impose administrative penalties for contraventions of section 34A.
Tabling of the Prudential Standard: Requirements Related to Regulatory Reporting and Annual Financial Statements (FSCA Communication 24 of 2025)
The Prudential Standard: Requirements Related to Regulatory Reporting and Annual Financial Statements for Pension Funds was tabled in Parliament on 21 November 2025. While the Prudential Standard states it comes into effect on 1 January 2026, this was not possible. Section 103 of the FSR Act requires a regulatory instrument to be submitted to Parliament for a period of at least 30 days while Parliament is in session. The regulatory instrument can only be made final after the 30-day period has passed. Parliament closed on 8 December 2025 and reopened on 23 January 2026. Once the 30-day Parliamentary period has lapsed, then the FSCA will be required to publish the final Prudential Standard on its website.
Key changes introduced by this Prudential Standard include:
- Consolidating all audit and regulatory reporting requirements into one instrument and replaces BN 14 and BN 77.
- This Prudential Standard applies to all retirement fund registered in terms of the PFA, regardless of the total asset value. The current exemption for funds with a total asset below R50 million not requiring the AFS to be audited will be removed.
- Changes have been made to align with the amendments to Regulation 28.
- A statement that the board has put in place appropriate controls to ensure compliance with Joint Standard 2 of 2024 – Cybersecurity and cyber resilience requirements.
- The investment schedule must include Environmental, Social and Governance (ESG).
- The detailed Schedules, Annexures and Notes are not included in the Prudential Standard and will be issued in a separate determination by the FSCA.
Ombud Council – Submission to Parliament of the draft Rules for the Pension Funds Adjudicator, 2026
The Ombud Council has submitted the draft Rules for the Pension Funds Adjudicator, 2026 (Rules) to Parliament for a period of 30 days while Parliament is in session. The 30-day period commenced on 8 December 2025 and the duration of the period will depend on Parliament’s timetable over January.
Some provisions will come into operation on the date of publication while the effective date of some provisions will be confirmed (and indicated on the final published version of the Rules) after further consultation with the Pension Funds Adjudicator. The following Rules will come into operation after further consultation with the Adjudicator:
- Sub-rules 6(1), (2), (3), (6) and (7) Communication with and rights and duties of parties to the complaint
- Sub-rules 7(3), (4) and (5) Settlement and conciliation
- Rule 10 Costs and interest
- Sub-rule 14(6) Liaison with Authority, Ombud Council and other entities – contravention of a provision of section 13A of the Act
- All other Rules come into operation on the date of publication on the website of the Ombud Council
OPFA Communication 2 of 2025: Death Benefits – Clarification on Jurisdiction
A communication has been published by the Office of the Pension Funds Adjudicator providing clarity on jurisdiction in respect of death benefit disputes.
- When a death benefit allocation is remitted to the fund by the Adjudicator, it is expected that, barring any section 30P or reconsideration application, the fund must take earnest steps to implement the order. The fund must act promptly, supplement its investigation where necessary, and issue a new decision.
- The fund’s new decision may justifiably mirror the original decision, save that the fund would have arrived at the new decision having had the benefit of considering new factors including those brought to light in the Adjudicator’s determination.
- Any person aggrieved by the fund’s new decision has the right to lodge a new complaint with the Adjudicator. In this regard, the Adjudicator’s jurisdiction is neither ousted by the doctrine of functus officio nor the principles relating to res judicata. The new complaint will be based on the new decision and the Adjudicator’s investigation and determination of the complaint will relate to the fund’s new decision (see Momentum Retirement Annuity Fund v LH Botha and Others – PFA47/2021).
National Treasury publishes updated Draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2025
The draft Bill is an updated version of the draft General Laws (Anti-Money Laundering and Combating Terrorism Financing) Amendment Bill, 2024 that was published for public comment on 13 December 2024. The draft Bill seeks to strengthen the country’s AML/CFT system by addressing the remaining deficiencies identified in the 2021 FATF Mutual Evaluation Report for South Africa, and also during the remedial process that culminated in South Africa exiting the FATF greylist in October 2025.
According to NT’s media statement, the 2025 Draft Bill expands on the previous version to incorporate amendments related to non-governmental organisations and the conducting of lifestyle audits to continue strengthening the country’s anti-money laundering and combating the financing of terrorism (AML/CFT) regime. It proposes amendments to four pieces of legislation that fall under the administrative responsibilities of different Ministers, namely:
- the Financial Intelligence Centre Act, 2001
- the Financial Sector Regulation Act, 2017
- the Companies Act, 2008
the Nonprofit Organisations Act, 1997
The amendments to the FSR Act are to close gaps in the protection of financial sector customers, and licensing and regulations for market conduct and anti-money laundering, and to strengthen licensing and enforcement powers.