PF Circular 75: Amendment of Regulation 28 under the Pension Funds Act, 1956

RAAD OP FINANSIELE DIENSTE FINANCIAL SERVICES BOARD Telex : 320153 Vermeulenstraat 240/240 Vermeulen Street (0002) Fax : (012) 21-1633 Privaatrak/Private Bag X238 (0001) PRETORIA Tel : Skakelbord/Switchboard : (012) 315-5111 Ui rek/Di rect : October 1991

CIRCULAR PF NO 75

(To all self-administered pension funds and insurers who

underwrite pension funds)

PENSION FUNDS ACT, 1956: AMENDMENT OF REGULATION 28 UNDER THE

ACT

1. You are hereby informed that Government Notice No R.2361,

published in Government Gazette No 13536 of 27 September 1991

contains the amendments of regulation 28 of the Regulations

made under the Act. The amendments of the regulations came

into operation on 30 September 1991.

2. The effect of the most important amendments are briefly

elucidated hereunder:-

(a) the investment limit of 85% in respect of immovable

property and shares, referred to in items 6 and 7 in

column 1 of the Annexure has been increased to 90%:

Provided that the limit in respect of the abovementioned

immovable property has been decreased from 30% to 25%

and the limit in respect of shares has been increased

from 65% to 75% and that in respect of investments in

the shares of a single company with a market

capitalisation greater than R2000 million, the limit has

been increased from 10% to 15%;

(b) the investm~nt limit in respect of asszts, rcfs-:-:: i, in items 6 up to and including item 9 (with the inclusion of (a), (c) and (d)) in column 1 of the abovementioned Annexure, has been increased from 90% to 95%; 21....

(c) doubt which exists that funds which are exempted in terms of section 2 (3) (a) (ii) of the Act, from certain provisions of the Act (so called underwritten funds) do not have to comply with the provisions of regulation 28, has been removed and such funds, where applicable, must obtain a certificate from the insurer indicating the reasons why the fund has not complied with the distribution requirements of assets specified in the Annexure . (d) if membership of a fund is not compulsory, the insurer must only in regard to his net liabilities against such funds, comply with the requirements of regulation 34 of the regulations made under the Insurance Act, 1943 (Act No 27 of 1943). (e) the categories of assets in paragraph 1 of column 1 of the said Annexure have been extended in order to provide for investments in the Post Office Savings Bank. (f) the investment limit in Krugerrands has been decreased from 15% to 10%. (g) debentures, which can be converted into shares, whether voluntarily or compulsorily, must now be shown as shares against item 7 in column 1 of the said Annexure. (h) the limit in respect of claims against any individual mentioned in paragraph 8(a) in column 1 of the said Annexure has been increased from 0,10% to 0,25%; and (i) the registrar's authority to only grant unconditional exemption in respect of an application for exemption to comply with the provisions of the regulations has been substituted by an authority to grant conditional exempt ion. 3. Statement 14 which has been adapted to provide for the amendments accordingly, is attached hereto. 4. A document, drawn up by the Actuarial Society of South Africa concerning investment guidelines, is attachc.3 for y~,, attention. The document touches on various investment guidelines but pension funds will benefit to study the guidelines in greater detail than contained in the document. This document does not subsititute any statutory requirements or regulations but must be seen as an aid thereto.