PF Circular 126: Rules for Unclaimed Benefits and Orphan Funds

# FINANCIAL SERVICES BOARD

Rigel Park 446 Rigel Avenue South Erasmusrand Pretoria South Africa  
P O Box 35655 Menlo Park Pretoria South Africa 0102  
Tel +27 (0)12 428-8000 Fax +27 (0)12 347-0221 E-mail info@fsb.co.za  
Toll free 0800110443 Internet http://www.fsb.co.za

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**ENQUIRIES:** Alta Marais  
**OUR REF:** 12/12/1  
**DATE:** 16 March 2007  

**D. DIALLING NO.:** 012 428 8065  
**FAX:** 012 347 0874  
**E-MAIL:** altam@fsb.co.za  

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**(To all approved administrators, privately administered funds and insurers who underwrite pension funds)**

## CIRCULAR PF NO. 126

- **RULES IN RESPECT OF UNCLAIMED BENEFITS**
- **FUNDS CONSISTING EXCLUSIVELY OF UNCLAIMED BENEFITS**
- **FUNDS WITHOUT A PROPERLY CONSTITUTED BOARD OF MANAGEMENT**
- **FUNDS WITH REMAINING ASSETS AND WITHOUT AN ASSOCIATED LIABILITY AFTER A SURPLUS APPORTIONMENT SCHEME OR NIL SCHEME**

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### 1. For purposes of this circular the following definitions apply:

“**orphan fund**” means a fund which does not have a properly constituted board of management as required in terms of section 7A of the Pension Funds Act, Act 24 of 1956 (“the Act”), and/or the rules of the fund. The Registrar will only classify a fund as an orphan fund:

(a) where the fund or administrator has provided sufficient proof to the Registrar that it is in the process of establishing a valid board; or  
(b) where the administrator has provided sufficient proof that it has not been successful in establishing a valid board; or  
(c) where it is impossible to establish a board, e.g in the case of a fund consisting exclusively of unclaimed benefits.

“**unclaimed benefit**” means, notwithstanding the rules of a fund—

(a) a benefit which has within a period of 24 months from the date on which it became legally due and payable, not been paid by the fund in respect of a member or beneficiary, other than an unpaid benefit or a benefit payable in the form of a pension or an annuity; or

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### (b) in relation to a benefit payable in the form of a pension or annuity, other than an unpaid benefit, any such benefit which has in a period of 24 months from the later of—

(i) the expiry date of the guarantee period for pension payments in terms of the rules of the fund; or  
(ii) the date on which an installment, legally due and payable, first became unpaid by a fund in respect of a member or beneficiary,  
not been paid by a fund in respect of a pensioner, member or beneficiary; or

### (c) in relation to a benefit payable to a former member who cannot be traced as envisaged in section 15B(5)(e) of the Act, any such benefit which has become legally due and payable in terms of an approved surplus apportionment scheme in respect of a former member and has not been paid by a fund within 24 months after the approval of such scheme by the Registrar; or

### (d) in relation to those benefits, other than those benefits contemplated in paragraphs (a), (b) and (c) above, or amounts held by a fund as at the date of this Circular, any such benefits or amounts not paid by the fund within a period of 24 months from the date of this Circular.

“**unpaid benefit**” means any benefit which is—

(a) withheld in terms of the rules of a fund pending the outcome of criminal or civil proceedings in terms of section 37D until the date of a court judgment in respect thereof, or the date on which a written admission of liability by the member is received by the fund; or  
(b) a deferred or paid-up benefit which, in terms of the rules of a fund, has become legally due and payable at the member’s normal retirement date from that fund, or such other date as specified in the rules of the fund; or  
(c) a death benefit payable in terms of section 37C of the Act which has not yet been paid to the dependant or nominee within a period of 12 months from the date of the member’s death, or such longer period as can reasonably be justified by the board of the fund for the non-payment of the benefit, having regard to the provisions of section 37C; or  
(d) due to be transferred to another fund, on amalgamation or otherwise, in terms of a provision of the Act; or  
(e) in terms of the rules of a fund, a benefit that only becomes payable after a specified period and which period is not capable of being waived or, where the period is capable of being waived, the trustees elect not to waive such period; or  
(f) indeterminable in terms of the rules of a fund as the circumstances surrounding the member’s termination or participation cannot be clearly determined and the member’s participation in the fund was deemed to have terminated for a period not exceeding 24 months; or

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### (g) a pension payable to a pensioner, which has been suspended in terms of the rules of a fund excluding a pension that has ceased to be payable due to the failure of a beneficiary to comply with the rules of the fund requiring the notification of continued existence for ongoing receipt of the pension.

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## RULES IN RESPECT OF UNCLAIMED BENEFITS

### 2. Any registered rule of a fund which allows for an unclaimed benefit to revert back to a fund may no longer be implemented. Such a reversion of benefits detrimentally affects the rights of a member whose benefit remains unclaimed. In the case of a liquidation or a full transfer, followed by deregistration, a member will be unable to claim.

Any such benefits must remain in the fund until the member has been traced.

Funds are required to amend their rules, on or before 31 December 2008, to remove any reference to benefits reverting back to the fund.

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## FUNDS CONSISTING EXCLUSIVELY OF UNCLAIMED BENEFITS OR FUNDS WITH REMAINING ASSETS AND WITHOUT AN ASSOCIATED LIABILITY

### 3. Where it can be demonstrated that a fund consists exclusively of unclaimed benefits or that the fund consists only of assets with no associated liability, such as:

(a) following the approval of a surplus apportionment scheme or recordal of a “nil” scheme as a result of:
    - an approved surplus apportionment scheme where assets or unclaimed benefits remain after distribution of benefits in terms of that scheme; or
    - in the case of a “nil” scheme where the value of the assets is insufficient to perform a surplus apportionment scheme or to distribute the assets to former members

(b) following a full transfer where it is not possible to transfer such assets as an agterskot to previously approved transfers; and

an application can be made to the Registrar for the fund to be classified as an unclaimed benefit fund.

Such an unclaimed benefit fund will be exempt from the payment of levies, statutory actuarial valuation reports, and need not request valuation-exemption.

Where the fund has been classified as an unclaimed benefit fund, the updated data as required in paragraphs 3.1 – 3.16 as well as the annual financial statements as set out in Annexure A, attached hereto, must be submitted electronically within a period of 6 months after the financial year-end of the fund.

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### The following information must accompany the application to be classified as an unclaimed benefit fund and must be submitted electronically:

#### 3.1 Name and registration number of the fund

**For each member:**

3.2 Full names  
3.3 ID Number  
    3.3.1 old ID number (where applicable)  
    3.3.2 new ID number (where applicable)  
3.4 Date of birth  
3.5 Last available contact telephone numbers  
3.6 Last available contact address  
3.7 Date when benefit became claimable or payable  
3.8 Type of benefit payable, i.e. death, withdrawal, retrenchment, etc  
3.9 Value of the benefit on date of accrual (date as per item 3.7 above)  
3.10 Current value of benefit  
3.11 Reconciliation of the benefit as per items 3.9 and 3.10 above  
3.12 Name and contact detail of the participating employer in respect of the member.  
3.13 Employer reference number or employee number.

**Administrator details:**

3.14 Name of administrator  
3.15 Responsible person in terms of section 13B  
3.16 Contact details of the responsible person

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## FUNDS WITHOUT A PROPERLY CONSTITUTED BOARD

### 4. Where a fund does not have a properly constituted board, and such a board cannot be established as required in terms section 7A of the Act and the rules of the fund, the responsible person of the administrator, as contemplated in section 13B of the Act, may apply on behalf of the fund to the Registrar:

(a) to classify the fund as an orphan fund; and  
(b) for the appointment of an authorised representative(s) to act on behalf of such fund.

Unless there are compelling reasons to suggest otherwise, umbrella funds, retirement annuity funds and preservation funds cannot be classified as an orphan fund. This is because the administrator/sponsor of the fund would be in a position to appoint the board of the fund, as such funds are exempt from the provisions of section 7A of the Act, in terms of section 7B of the Act.

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### The following information and documentation must accompany the application for classification as an orphan fund, including an unclaimed benefit fund:

#### 4.1 Where a board cannot be established due to a fund consisting exclusively of unclaimed benefits, documented evidence of the unclaimed benefits, the associated assets and the date the last active member / pensioner exited the fund.

#### 4.2 For funds other than unclaimed benefit funds, proof that the fund is in the process of appointing a properly constituted board, or that all reasonable steps have been taken to appoint a board without success, in which case the fund will be classified as an orphan fund for a period of 12 months.

#### 4.3 Where a fund no longer has assets, liabilities or members as a result of a section 14 transfer, proof that the approved transfer has been effected and all assets, liabilities and members transferred e.g. by submitting a copy of the bank statement or any reliable proof that the fund has ceased to exist.

#### 4.4 Where a fund has terminated naturally, i.e. where all benefits have been paid in the normal course of pension fund business, e.g. by submitting a copy of the bank statement and a certificate by the valuator, auditor or authorised representative confirming that all members have been paid their benefits in terms of the rules of the fund and that the fund has no remaining assets, liabilities or members.

### 5. Where the Registrar classified a fund as an orphan fund (including an unclaimed benefit fund) and has appointed an authorised representative(s) for a specific fund, such authorised representative may:

5.1 Amend rules of a fund, excluding any changes to benefits or contributions;  
5.2 Appoint an auditor and/or valuator;  
5.3 Determine an appropriate investment policy based on the membership profile and risk profile of the fund;  
5.4 Approve the financial statements and/or valuation reports;  
5.5 Authorise and submit an application for the approval of a section 14 transfer to the registrar;  
5.6 Appoint a liquidator in terms of the rules of a fund;  
5.7 Submit an affidavit to the Registrar requesting the cancellation of registration of a fund in terms of section 27 of the Act;  
5.8 Where the liquidation of a fund has been approved by the Registrar, payments to beneficiaries have been made and final accounts submitted to the Registrar but the liquidator is not traceable or deceased, submit an affidavit to the Registrar for the cancellation of registration of a fund in terms of section 28 of the Act.

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### 5.4 In the case of a full transfer, provide the Registrar with proof that the transfer was effected and the assets transferred, e.g. by submitting a copy of the bank statement or any reliable proof that the fund has ceased to exist.

### 5.5 Prepare and submit a “nil” scheme on behalf of a fund.

Guidelines for the electronic submission of the application and data are available on the FSB website, [www.fsb.co.za](http://www.fsb.co.za), under “Retirement Funds/ Unclaimed Benefit Funds: Electronic Submissions”.

Yours faithfully

**JA BOYD**  
DEPUTY EXECUTIVE OFFICER AND  
DEPUTY REGISTRAR OF PENSION FUNDS

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## ANNEXURE A

### ANNUAL FINANCIAL STATEMENTS  
*(Unclaimed Benefits Funds)*

**NAME OF RETIREMENT FUND:**  
**FINANCIAL SERVICES BOARD REGISTRATION NUMBER:**  
**SOUTH AFRICAN REVENUE SERVICES APPROVAL NUMBER:**  
**For the period:** to

| Schedule | Page |
|----------|------|
| A        | Regulatory information |
| B        | Report of the board of trustees/Principal officer/Authorised representative at administrator |
| C        | Statement of net assets and funds |
| D        | Statement of changes in net assets and funds |
| E        | Notes to the financial statements |
| F        | Assets held in compliance with Regulation 28 |

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## SCHEDULE A  
### REGULATORY INFORMATION (to be completed by the principal officer)  
**For the period ended .....**

**Registered office of the fund**  
Postal address:  
Physical address:  

**Financial reporting periods**  
Current: to  
Previous: to  
<Insert reason for any change in the reporting period of the fund>

**Board of trustees / Authorised Representative(s)**

| Full name | Capacity* | Date appointed | Date resigned |
|-----------|-----------|----------------|---------------|
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |
|           |           |                |               |

* - 'M' denotes member elected 'E' denotes employer appointed 'A' denotes alternate  
* - 'C' denotes chairperson  
* - 'I' denotes independent  
* - 'R' denotes authorised representative

**Fund officers**

| Principal officer | |
|-------------------|---|
| Full name:        |   |
| Postal address:   |   |
| Physical address: |   |
| Telephone number: |   |
| Email address:    |   |

**Professional service providers**

| | Benefit administrator | Investment administrator |
|---|---|---|
| Full name: | | |
| Postal address: | | |
| Physical address: | | |
| Telephone number: | | |
| Reg no. ito section 13B: | | |
| FAIS registration number: | | |