QUESTION TIME WITH THE REGISTRAR OF PENSION FUNDS Rosemary Hunter FSB Deputy Executive Officer: Retirement Funds and Friendly Societies

Q1: EXPIRY OF SECTION 7B(1)(B) EXEMPTIONS What is the Registrar’s position as to the status of the board of a fund in terms of Section 7B(1)(b) of the PFA when an exemption has expired and no further exemption has been issued, either because: A written application was not submitted by the fund prior to expiry; or A written application was submitted timeously, but the FSB failed to respond to such application prior to expiry? Why, in view of the problems this has caused, does the FSB not issue indefinite exemptions to Umbrella, Preservation and Unclaimed Benefit Funds instead of requiring annual renewal?

Q2: FUND DEREGISTRATIONS What is the plan with fund deregistrations and when will the industry have clarity? How is this likely to be affected by the court case?

Q3: DEATH BENEFITS: s37C Are there any plans to amend this section in light of the challenges that it causes the industry (the duties imposed on the trustees to find all the dependants and establish their degree of dependency is very onerous and not always logistically possible and, in turn, has been having a negative impact on timeframes)?

Q4: LIQUIDATION OF FUNDS Liquidations take too long and are very challenging for small funds. Are there any plans to streamline the liquidation process, especially for small funds?

Q5: SUITABILITY OF PENSION FUNDS ACT TO UMBRELLA FUNDS Is the Pension Funds Act likely to be amended, or regulations or other guidance published, to accommodate the rise in popularity of Umbrella Funds and the need to regulate the relationship, roles and responsibilities of the Trustees, MANCOs and participating employer?

Q6: RISK-BASED SUPERVISION Would the Registrar comment on whether she considers that risk-based supervision is being implemented by her office when the perception of some funds and practitioners is that in certain areas (e.g. rule amendments) there is undue focus on non-material issues and inconsistency in approach between different individuals. Are scarce human resources being used optimally and what is being done to address what appears to be uneven levels of experience?

A6: RISK-BASED SUPERVISION Suitability of fund design for target market(s) Membership & contribution risks Administration risks Investment risks Governance risks Risk ratings Design of risk-based supervision policies & strategies Off-site reviews & engagement Regular on-site visits & engagement As and when interventions when problems identified Formulation of new policies, regulatory instruments, exemption conditions etc Re-allocation of regulatory resources, including HR, IT resources

Q7: REGULATION 28 IN THE CURRENT ECONOMIC ENVIRONMENT Is the Registrar considering any changes to regulation or guidance in light of current economic circumstances. For example, does Regulation 28 need to be reconsidered in light of the rapid depreciation of the Rand which can have the consequence of requiring members to rebalance their portfolio?

A 7: REGULATION 28 IN THE CURRENT ECONOMIC ENVIRONMENT 28(3)( j)  Notwithstanding paragraphs (a)-(i), the limits set out in this regulation may be exceeded where the excess is due to a change in the fair value or characteristic of an asset, and not as a result of discretionary transacting either by the fund or on the fund’s behalf, provided that where a fund exceeds any limit— (i) such fund must inform the Registrar without delay of the limit being exceeded, including the reasons for such excess; (ii) such fund must not, for as long as the excess exists, make any further investments or contractual commitments to invest in those assets or categories of assets; and (iii) the board must ensure compliance with the relevant limits within 12 months from the date of the excess arising or such other period as determined by the Registrar.

THANK YOU