Legal update for retirement funds


Two-pot retirement system – a buffer for financial hardship

Leanne van Wyk, Director,
ICTS Legal Services (Pty) Ltd

Rules can’t be applied before they are registered – the Mudau Constitutional Court case

The FSCA’s revamped Trustee Training Toolkit e-learning platform

Upcoming changes for unclaimed death benefits – draft Interpretation Ruling

Naming and shaming by the FSCA of employers with arrear contributions

Note about two-pot fund rules

Rules can’t be applied before they are registered – the Mudau Constitutional Court case

On 2 August 2023, the Constitutional Court handed down judgment in the matter of Mudau v Municipal Employees Pension Fund and others [1].  The unanimous decision, written by Justice Kollapen, aside a decision of the Supreme Court of Appeal and confirmed that a rule amendment with a backdated effective date may not apply before it is registered by the Financial Sector Conduct Authority (FSCA) (or the Registrar of Pension Funds as it was then).

Following the concerning previous judgment of the Supreme Court of Appeal in this matter, we are relieved to see the approach taken by the Constitutional Court.

Important points from the Constitutional Court judgment

  • A fund may not apply an unregistered rule in anticipation of its future registration.
  • It is only the registered rules that are in existence and that are binding on a fund. There is no amendment to a rule until it is registered, so it cannot bind members.
  • Certain rules may have retrospective effect once the are registered registration. They do not have binding effect before they are registered.
  • A fund cannot rely on an unregistered rule. To purport to do so is contrary to the Pension Funds Act and a breach of fiduciary duties.
  • The unregistered amended rule did not apply to the Adjudicator proceedings. The Adjudicator deals with the law and rules as at the date that the complaint is lodged.
  • With respect to Adjudicator cases: (a) identification of the complaint and the law applicable are determined with reference to the proceedings before the Adjudicator on the merits of the complaint; and (b) additional evidence on the merits may be placed in front of the High Court.

The FSCA’s revamped Trustee Training Toolkit e-learning platform

The FSCA has a free e-learning online platform for Trustees called the Trustee Training Toolkit. The platform and training has been revamped and was re-launched by the FSCA at the end of September 2023.

The Toolkit will made up of 22 modules going forward:

  • The 11 new modules launched on 27 September; and
  • 11 more modules next year.

All Trustees must, by law, complete the Toolkit.

Completion dates

The 11 modules released on 27 September 2023 must be completed within six months of 27 September 2023 by Trustees existing at this date.

If a Trustee is appointed or elected after 27 September 2023, then the Toolkit must be complete by a Trustee within six months of their appointment or election.

The Toolkit includes tests and assessments, but there is no pass or fail result.

You can access the online Trustee Toolkit training and register/ login from this address:

Upcoming changes for unclaimed death benefits – draft Interpretation Ruling

On 14 August 2023, the FSCA issued a DRAFT Interpretation Ruling (IR) for comment.

The FSCA, through an IR, seeks to promote clarity, consistency and certainty in the interpretation and application of financial sector laws, in this case section 37C of the the Act.

The existing Interpretation Ruling 1 of 2020 (Retirement Fund), which is an interpretation of section 37C of the Act, took effect on 25 March 2020.

The FSCA believes that it made an error in the IR in its interpretation of section 37C as regards unclaimed benefits. In terms of the current IR, when a member entitled to an unclaimed benefit has not instructed the fund as to how they want their unclaimed benefit paid and such member dies, that benefit must be paid in terms of section 37C of the Act and may not be paid to the unclaimed benefit member’s estate.

The FSCA want to change their current interpretation with respect to unclaimed benefits and interpret section 37C such that it does not apply to unclaimed benefits where the unclaimed benefit member dies. In these circumstances the fund will pay the unclaimed benefit to the deceased member’s estate.

Changes to the IR are not proposed in respect of paid-up members and deferred retirees. The remaining provisions of the existing IR won’t change, for example those related to paid-up members and deferred retirees.

The replacement Interpretation Ruling is expected to be published by the FSCA in December 2023 (and the existing Interpretation Ruling withdrawn at the same time).

Naming and shaming by the FSCA of employers with arrear contributions

The FSCA’s Communication 21 of 2023 (RF) and media release on 1 September 2023 have been published and include the names of employers (and funds) with arrear contributions.

3262 employer names were published. These employers relate to a much smaller list of funds.

The FSCA state it received notification of 5430 employer names as at 30 April 2023. The difference between the 5430 employer names received and the 3262 employer names published is that the FSCA only published the names of employers who were in arrears for four months or more.

The statistics published are as follows:

Municipalities: approximately R1 billion in arrear contributions; and

Private sector companies: approximately R6 billion in arrear contributions.






Note about two-pot fund rules

In terms of the current draft of the two-pot legislation, fund rules will need to be amended for the two-pot system (and registered) before 1 March 2025 (if this is the final date). This is likely to be a large amendment to the rules.

The FSCA is planning to issue a Guidance Notice containing principles for two-pot rule amendments. Hopefully this is issued sooner rather than later, but it is likely that the FSCA also needs to see the final two-pot legislation before finalising and issuing it.


[1] – 1[2023] ZACC 26

Leanne van Wyk
 Director  at ICTS Legal Services | + posts





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