Regulatory Alerts2018-03-31
Interpretation Note 3 of 2010: Reserve Accounts in Pension Fund Rules
The Registrar of Pension Funds at the Financial Services Board of South Africa mandates that registered pension funds explicitly define and detail the operation of contingency and investment reserve accounts within their governing rules. Where funds establish such accounts, their rules must specify the account's nature, opening balance determination, allowable credits and debits, and dissolution procedures, with any rule amendments required within 12 months of actuarial recommendations or earlier for section 14 transfers. This directive ensures regulatory oversight of reserve account magnitudes and motivations, clarifying that while establishment remains optional, any existing or proposed reserve account must be formally codified in fund rules to satisfy the Pension Funds Act, 1956.