Prudential Standard 2024 – Regulation 28 Quarterly Reporting Requirements for Pension Funds

NOTICE REGARDING THE PUBLICATION OF DRAFT PRUDENTIAL STANDARD [-] OF 2022 (RF) – REGULATION 28 QUARTERLY REPORTING REQUIREMENTS FOR PENSION FUNDS FINANCIAL SECTOR REGULATION ACT, 2017 PENSION FUNDS ACT, 1956 The Financial Sector Conduct Authority (Authority) invites, in accordance with section 100(1) of the Financial Sector Regulation Act, 2017 (Act No. 9 of 2017) (FSR Act), submissions on the draft Prudential Standard [--] of 2022 (RF) – Regulation 28 Quarterly Reporting Requirements for Pension Funds, to be made in terms of regulation 28(8)(a) of the Regulations under the Pension Funds Act, 1956 (Act No. 24 of 1956), published in Government Notice R98 of Government Gazette No. 126 on 26 January 1962, as amended from time to time, read with section 105 and 292(2)(b), (3) and (4) of the FSR Act, as set out in the Schedule. The draft Prudential Standard, together with a statement supporting the draft Prudential Standard, is available on the Authority’s website at https://www.fsca.co.za. Submissions on the draft Prudential Standard must, using the submission template available on the Authority’s website, be submitted in writing on or before 7 December 2022 to the Authority at FSCA.RFDStandards@fsca.co.za. UNATHI KAMLANA COMMISSIONER FINANCIAL SECTOR CONDUCT AUTHORITY Date of publication: 4 November 2022

SCHEDULE PRUDENTIAL STANDARD [-] OF 2022 (RF)

1. Definitions In this schedule “the Act” means the Pension Funds Act, 1956 (Act No. 24 of 1956) and any word or expression to which a meaning has been assigned in the Act shall bear the meaning so assigned to it, and– “first quarter” means 1 January to 31 March of every year; “second quarter” means 1 April to 30 June of every year; “third quarter” means 1 July to 30 September of every year; “fourth quarter” means 1 October to 31 December of every year; “quarterly report” means the report contained in Annexure A to this Schedule; “quarters” refers to the first quarter, second quarter, third quarter and fourth quarter; and “Regulation 28” refers to regulation 28 of the Regulations in terms of Section 36 of the Act, published in Government Notice R98 of Government Gazette No. 126 on 26 January 1962, as amended from time to time.
2. Submission of quarterly reports (1) All funds must report on compliance and non-compliance with Regulation 28 by submitting a quarterly report to the Authority in accordance with the time periods stipulated in paragraph 3(2). (2) Where funds exceed the limits for reasons other than regulation 28(3)(j) and have not been granted exemption in terms of regulation 28(9), they must complete the non￾compliance section of the quarterly report in respect of the fund, an issuer or entity, and in respect of each member, as applicable. (3) In the following instances, funds are not required to submit a quarterly report: (a) Where a liquidator has been appointed and such appointment has been approved by the Authority in terms of section 28(2) of the Act; (b) where a fund has been exempted from liquidation in terms of section 28(17) of the Act and all the conditions of the exemption has been complied with; or (c) where a full transfer was approved by the Authority in terms of section 14 of the Act and all the provisions of section 14 have been complied with in giving effect to the Authority’s approval.
3. Frequency and manner of reporting (1) A fund must complete all fields of the quarterly report and must submit the quarterly report to the Authority, in accordance with the following time periods:

(a) For the first quarter ending 31 March 2023 on or before 30 September 2023; 1 and (b) for all subsequent quarters within 90 days after quarter-end. (2) The Authority may determine the manner of submission of the quarterly reports by notice on its website. 4. Short title, commencement and repeals (1) This Prudential Standard is called Regulation 28 Quarterly Reporting Requirements for Pension Funds, 2023, and comes into effect on the date of publication. (2) The following notices are hereby repealed: (a) Regulation 28 Prescribed Report Format under Regulation 28 of the Act, as published under Financial Services Board Notice No. 2 of 10 June 2011; (b) Prescribed Reporting Format prescribed under Regulation 28 of the Act as published under Financial Services Board Notice No. 3 of 19 December 2011; (c) Quarterly Non-compliance Reporting prescribed under Regulation 28 of the Act as published under Financial Services Board Notice No. 3 of 31 May 2012 –; and (d) Quarterly Audit Annual Report Format prescribed under Regulation 28 of the Act as published under Financial Services Board Notice No. 6 of 2 October 2012 – Regulation 28 Quarterly Non-compliance Report. 1 This report should be submitted simultaneously with quarterly report for the second quarter ending 30 June 2023.

ANNEXURE 1 PART 1: AT FUND LEVEL AND MEMBER LEVEL ASSETS HELD IN COMPLIANCE WITH REGULATION 28 As at quarter … TABLE 1: List issuers/entities which exceeds 5% of total assets2 Fair value R A Total investments as per Schedule IA B Less: Reg 28(9) exempted investments

C Less: Investments not disclosed /data not available for disclosure [Refer Schedule IAN] D TOTAL ASSETS for REGULATION 28 DISCLOSURE 2 A fund must disclose the asset aggregates of 5% and above per entity or issuer and the registered name of the entity or issuer as required in terms of this Annexure.

FUND LEVEL MEMBER LEVEL Number of issuers/entities non-compliant during the period Number of issuers/entities non-compliant during the period Number of issuers/entities non-compliant during the period Number of issuers/entities non-compliant during the period FUND LEVEL R % Inside the Republic % Foreign % Inside the Republic % Foreign % 1 CASH 100% 1.1 Notes, deposits, money market instruments issued by a South African Bank, margin accounts, settlement accounts with an exchange and Islamic liquidity management financial instruments 100% (a) Notes and coins, any balance or deposit in an account held with a South African bank -per issuer/entity 25% (b) A money market instrument issued by a South African bank including an Islamic liquidity management financial instrument -per issuer/entity 25% (c) Any positive net balance in a margin account with an exchange -per issuer/entity 25% (d) Any positive net balance in a settlement account with an exchange, operated for the buying and selling of assets -per issuer/entity 25% 1.2 Balances or deposits, money market instruments issued by a foreign bank including Islamic liquidity management financial instruments (a) Any balance or deposit held with a foreign bank -per issuer/entity 5%

(b) Any balance or deposit held with an African bank -per issuer/entity 5% (c) A money market instrument issued by a foreign bank including an Islamic liquidity management financial instrument -per issuer/entity 5% 2 DEBT INSTRUMENTS INCLUDING ISLAMIC DEBT INSTRMENTS 100% issued/guarantee by Republic otherwise 75% 2.1 Inside the Republic 75/100% (a) Debt instruments issued by, and loans to, the government of the Republic, and any debt or loan guaranteed by the Republic 100% (b) Debt instruments issued or guaranteed by the government of a foreign country 75% -per issuer/entity 10% (c) Debt instruments issued or guaranteed by a South African Bank against its balance sheet:- 75% (c)(i) Listed on an exchange with an issue market capitalisation of R20 billion or more, or an amount or conditions as prescribed 75% -per issuer/entity 25%

(c)(ii) Listed on an exchange with an issuer market capitalisation of between R2 billion and R20 billion, or an amount or conditions as prescribed 75% -per issuer/entity 15% (c)(iii) Listed on an exchange with an issuer market capitalisation of less than R2 billion, or an amount or conditions as prescribed 75% -per issuer/entity 10% (c)(iv) Not listed on an exchange 25% -per issuer/entity 5% (d) Any positive net balance in a settlement account with an exchange, operated for the buying and selling of assets -per issuer/entity 25% (d)(i) Listed on an exchange 50% -per issuer/entity 10% (d)(ii) Not listed on an exchange 25% -per issuer/entity 5% (e) Other debt instruments:- 25% (e)(i) Listed on an exchange 25%

• per instrument 5% (e)(ii) Not listed on an exchange 25%

• per instrument 5% 2.2 Foreign SARB maximum limits (a) Debt instruments issued by, and loans to, the government of the Republic, and any debt or loan guaranteed by the Republic SARB maximum limits (b) Debt instruments issued or guaranteed by the government of a foreign country SARB maximum limits -per issuer/entity 10% (c) Debt instruments issued or guaranteed by a South African Bank against its balance sheet:- SARB maximum limits (c)(i) Listed on an exchange with an issue market capitalisation of R20 billion or more, or an amount or conditions as prescribed SARB maximum limits -per issuer 25% (c)(ii) Listed on an exchange with an issuer market capitalisation of between R2 billion and R20 billion, or an amount or conditions as prescribed SARB maximum limits -per issuer 15% (c)(iii) Listed on an exchange with an issuer market capitalisation of less than R2 billion, or an amount or conditions as prescribed SARB maximum limits -per issuer 10% (c)(iv) Not listed on an exchange 25%

• per issuer 5% (d) Debt instruments issued or guaranteed by an entity that has equity listed on an exchange SARB maximum limits (d)(i) Listed on an exchange SARB maximum limits

-per issuer 10% (d)(ii) Not listed on an exchange 25% -per issuer 5% (e) Other debt instruments:- 255 (e)(i) Listed on an exchange 25%

• per instrument 5% (e)(ii) Not listed on an exchange 15% -per instrument 5% 3 EQUITIES 3.1 Inside the Republic 75% (a) Preference and ordinary shares in companies, excluding shares in property companies, listed on an exchange:- 75% (a)(i) Issuer market capitalisation of R20 billion or more, or an amount or conditions as prescribed 75% -per issuer 15% (a)(ii) Issuer market capitalisation of between R2 billion and R20 billion, or an amount or conditions as prescribed 75% -per issuer 10% (a)(iii) Issuer market capitalisation of less than R2 billion, or an amount or conditions as prescribed 75%

-per issuer 5% (b) Preference and ordinary shares in companies, excluding shares in property companies, not listed on an exchange 10% -per issuer 2.5% 3.2 Foreign SARB maximum limits (a) Preference and ordinary shares in companies, excluding shares in property companies, listed on an exchange:- SARB maximum limits (a)(i) Issuer market capitalisation of R20 billion or more, or an amount or conditions as prescribed SARB maximum limits -per issuer 15% (a)(ii) Issuer market capitalisation of between R2 billion and R20 billion, or an amount or conditions as prescribed SARB maximum limits -per issuer 10% (a)(iii) Issuer market capitalisation of less than R2 billion, or an amount or conditions as prescribed SARB maximum limits -per issuer 5% (b) Preference and ordinary shares in companies, excluding shares in property companies, not listed on an exchange 10% -per issuer 2.5% 4 IMMOVABLE PROPERT

4.1 Inside the Republic 25% (a) Preference shares, ordinary shares and linked units comprising shares linked to debentures in property companies, or units in a Collective Investment Scheme in Property, listed on an exchange 25% (a)(i) Issuer market capitalisation of R10 billion or more, or an amount or conditions as prescribed 25% -per issuer 15% (a)(ii) Issuer market capitalisation of between R3 billion and R10 billion, or an amount or conditions as prescribed 25% -per issuer 10% (a)(iii) Issuer market capitalisation of less than R3 billion or an amount or conditions as prescribed 25% -per issuer 5% (b) Immovable property, preference and ordinary shares in property companies, and linked units comprising shares linked to debentures in property companies, not listed on an exchange 15% -per issuer 5% 4.2 Foreign 25% (a) Preference shares, ordinary shares and linked units comprising shares linked to debentures in property companies, or units in a Collective Investment Scheme in Property, listed on an exchange 25% (a)(i) Issuer market capitalisation of R10 billion or more, or an amount or conditions as prescribed 25%

-per issuer 15% (a)(ii) Issuer market capitalisation of between R3 billion and R10 billion, or an amount or conditions as prescribed 25% -per issuer 10% (a)(iii) Issuer market capitalisation of less than R3 billion or an amount or conditions as prescribed 25% -per issuer 5% (b) Immovable property, preference and ordinary shares in property companies, and linked units comprising shares linked to debentures in property companies, not listed on an exchange 15% -per issuer 5% 5 COMMODITIES 5.1 Inside the Republic 10% (a) Kruger Rands and other commodities on an exchange, including exchange traded commodities 10% (a)(i) Gold (including Kruger Rands) 10% (a)(ii) Other commodities 5% -each other commodity 5%

5.2 Foreign 10% (a) Gold and other commodities on an exchange, including exchange traded commodities 10% (a)(i) Gold 10% (a)(ii) Other commodities 5% -each commodity 5% 6 INVESTMENTS IN THE BUSINESS OF A PARTICIPATING EMPLOYER INSIDE THE REPUBLIC IN TERMS OF:- (a) Section 19(4) of the Pension Funds Act 5% (b) To the extent it has been allowed by an exemption in terms of section 19(4A) of the Pension Funds Act 10% 7 HOUSING LOANS GRANTED TO MEMBERS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 19(5) 65% 8 HEDGE FUNDS 10% 8.1 Inside the Republic 10% (a) Hedge fund 10%

(a)(i) Funds of hedge funds 10%

• per issuer 5% (a)(ii) Hedge funds 10%
• per issuer 2.5% 8.2 Foreign 15% (a) Hedge fund 10% (a)(i) Funds of hedge funds 10%
• per issuer 5% (a)(ii) Hedge funds 10%
• per issuer 2.5% 9 PRIVATE EQUITY FUNDS 15% 9.1 Inside the Republic 15% 9.1(a) Funds of private equity funds 10% 9.2(b) Private equity funds 5%

*Note that paragraph 11(a) and 11(b) should be excluded in adding categories of assets that make up total assets on the above Table 1 9.2 Foreign 15% 9.2(a) Funds of private equity funds 10% 9.2(b) Private equity funds 5% 10 ANY OTHER ASSETS NOT REFERRED TO IN THIS SCHEDULE 2.5% 11(a) Overall limit for infrastructure across all classes (excluding debt instruments issued by, and loans to, the government of the Republic and any debt or loan guaranteed by the Republic) 45% 11(b) Overall limit for all instruments per entity/issuer (local and or foreign) (excluding debt instruments issued by, and loans to, the government of the Republic and any debt or loan guaranteed by the Republic) 25% TOTAL ASSETS (Schedule IA – Total investments

16 INVESTMENT SUMMARY (REGULATION 28) – AT FUND LEVEL Local Percentage of Fair value Foreign (Excluding Africa) Percentage of Fair value Africa Percentage of Fair value Total R % R % R % R 1 Balances or deposits, money market instruments issued by a bank including Islamic liquidity management financial instruments 2 Debt instruments including Islamic debt instruments 3 Equities 4 Immovable property 5 Commodities 6 Investment in the business of a participating employer 7 Housing loans granted to members - section 19(5) 8 Hedge Funds, and any other assets not referred to in this schedule 9 Private equity funds 10 Any other assets not referred to in this schedule 11 Infrastructure 12 Fair value of assets to be excluded in terms of sub-regulations3(c) and (8)(b) of Regulation 28 13 Investments not disclosed/data not available for disclosure TOTAL (equal to the fair value of assets)

17 Note: Maximum Foreign limits and disclosure in terms of South African Reserve Bank requirements BREACHES IN TERMS OF SUB REGULATION 3 OF REGULATION 28 AT FUND LEVEL As at quarter …… Total (Inside & Foreign) Percentage of Fair value Regulation 28 limits R % Asset Limits in terms of sub regulation 3(f) Other debt instruments not listed

Equities not listed

Immovable properties not listed

Hedge funds and

Private Equity funds -- Other assets -- TOTAL 45 Asset Limits in terms of sub regulation 3(g) Equities not listed

Private Equity funds

TOTAL 15 Asset Limits in terms of sub￾regulation 3(h) Cash and deposits with a South African Bank --

18 Debt instruments guaranteed by a South African Bank -- TOTAL 25

Cash and deposits with a South African Bank -- Debt instruments guaranteed by a South African Bank -- TOTAL 25

Overall limit for all instruments per entity/issuer (local and or foreign) (excluding debt instruments issued by, and loans to, the government of the Republic and any debt or loan guaranteed by the Republic) List Entities exceeding 25% Counter-party exposure 1. 2. 3.

TOTAL 25 NOTES:

1. Credit balance in current accounts must be included in item 1. 2 If the investments exceed the limit per institution/company/individual and no exemption has been obtained, the details below must be completed for each institution/company/individual in each category of assts. Investments in institution/company/individual Item % of Fair Value Fair Value ( R) ……………………………………… …………………… ……… ……… ……. ……………. ……………………………………… …………………… ……… ……… ……. ……………. ……………………………………… …………………… ……… ……… ……. …………….

19 3. EXEMPTIONS GRANTED BY THE AUTHORITY Item Max % Date of letter Expiry Date

20 PART 2: AT FUND LEVEL ONLY AS AT QUARTER ….. REPORTING IN RESPECT OF INFRASTRUCTURE ASSETS TABLE 2: List issuers/entities which exceeds 5% of total assets Asset class Percentage (Infrastructure) (%) Rand value (infrastructure) (R) TOTAL

1. Cash
2. Debt instruments including Islamic debt instruments: 2.1 Debt instruments issued by, and loans to, the government of the Republic and any debt or loan guaranteed by the Republic 2.2 Other debt instruments: 2.2.1 Listed debt instruments 2.2.2 Unlisted debt instruments
3. Equities: 3.1 Listed equities 3.2 Unlisted equities
4. Immovable property (direct & indirect)
5. Commodities
6. Investment in the business of the participating employer
7. Housing loans n/a

21 8. Hedge funds 9. Private equity 10. 10. All other assets not referred to in this Table 11. 11. Infrastructure exposure in the rest of Africa Total Investment in respect of direct infrastructure, excluding debt instruments issued by, and any loans to, the government of the Republic and any debt or loans guaranteed by the Republic % R

22 PART 3 AT FUND LEVEL ONLY AS AT QUARTER ….. REPORTING IN RESPECT OF ENVIROMENTAL SOCIAL AND GOVERNANCE (ESG) TABLE 3 Question Yes No Does the fund have an IPS that includes ESG integration? Does the fund’s IPS include details on how the fund intends to monitor, evaluate, and make strategic decisions about the ongoing ESG sustainability of the assets which it owns and which it is intending to acquire? Does the fund’s IPS include an Active Ownership policy? Does the fund have a specific policy that supports green/climate investment? Is the fund exposed to coal mining, coal logistics and/or coal fired power plants Does the fund have investment in green, social, or sustainability themed bonds?

23 Would the fund be willing to commit to reduced exposure to coal? Would the fund be willing to commit to increasing allocation to green and climate-focused investments? Would the fund be willing to commit to increasing allocation to investment with positive social impact? Did the fund align with Sustainable Development Goals (SDGs) in some way? Would you say your fund’s annual reports currently address the elements contained in the Authority’s Guidance Notice relating to sustainability of investments and assets in the context of a retirement fund’s IPS? Questions USREG INFRA PE WM SOGEG PT CS/ SWM EV GB/ GH GR SB SuB Which of the Top 3 categories of green/climate assets are cited by the fund? Which of the following green asset allocation apply to the fund? What is the amount of the fund’s exposure to coal (Includes indirect exposure)?

24 What is the amount of the fund’s exposure to green, social or sustainability themed bonds? Abbreviations Utility scale renewable energy generation (USREG) Infrastructure (INFRA) Private Equity (PE) Waste management (WM) Small/off-grid embedded renewable energy generation (SOGEG) Public transportation (PT) Climate-smart / sustainable water management (CS/ SWM) Electric vehicles (EV) Green buildings / green housing (GB/ GH) Green bond (GR) Social bonds (SB) Sustainability bond (SuB) Fund name:…………………………………………. Quarter ending on: ……………………………………………….. DECLARATION BY THE BOARD OF THE FUND

1. The Board of the fund hereby confirms that the information contained in PART 1,2 and 3 is, to the best of our knowledge accurate and complete.
2. The Board of the fund also confirms that the fund did/did not exceed the aggregate foreign exposure as determined by the South African Reserve Bank(SARB).
3. Any other relevant information: …………………………………………………………………………………………………………………………………………………………………………………………………………………………………… ………………………………………………………………………………………………………………………………………………………………………………………………………………………………….. ………………………………………… …………………………………………………. ……………………………………………………. CHAIRPERSON( Signature) PRINT NAME DATE

25 Note: Where the completion, submission and declaration in respect of this report has been delegated to the principal officer, board member, administrator or any other person/entity, such delegation must be duly authorized and it should be noted that the Board of the fund remains ultimately responsible for the accuracy and completeness of this submission. I, ……………………………………..(print name), have been duly authorised by the Board of the fund and hereby confirms that the information contained in Part 1,2 and 3 is, to the best of our knowledge accurate and complete. ……………………………………………………… …………………………………………………………. ………………………………………………….. PERSON RESPONSIBLE (signature) PRINT NAME DATE DESIGNATION: ……………………………………………….