FSCA publishes Pension Funds Act Guidance Note 4 of 2018 re different exemptions

The Financial Sector Conduct Authority (FSCA) has this week published Pension Funds Act (PFA) Guidance Note 4 of 2018 entitled ‘Exemption from the requirement that members of the fund have a right to elect members of the Board of a fund in terms of section 7B(1)(b) of the Pension Funds Act, 24 of 1956.’

The Guidance Note details the conditions that may be imposed by the Authority in such cases.

The default position as regards the composition of the board of management of a fund is in section 7A(1) of the PFA, which requires that every fund have a board consisting of at least four members, at least 50% of whom the members of the fund shall have the right to elect. Section 7B of the PFA provides an alternative to the provisions of section 7A in certain defined circumstances. After receiving representations in this regard from funds and re-considering the provisions of section 7B(1)(b) of the PFA, the Authority concluded that exemptions granted upon written application by a fund need not be time bound or subject to a specific period. Paragraph 6.4 of Circular PF No 96 is therefore replaced and the exemption granted by the Authority on application by a fund, depending on the specific circumstances, may be of indefinite duration.

Where applicable, funds which apply for exemption must amend their rules to comply with the conditions within 180 days from the date of an exemption being granted.