Pension funds governance and oversight
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Individual Reform: Pension funds governance and oversight 2026 - 2027

Strengthening governance and investment oversight in pension funds through new standards and proactive supervision

No data available for the deliverable: Strengthening governance and investment oversight in pension funds through new standards and proactive supervision

No data available for the deliverable: Strengthening governance and investment oversight in pension funds through new standards and proactive supervision

No data available for the deliverable: Strengthening governance and investment oversight in pension funds through new standards and proactive supervision

No data available for the deliverable: Strengthening governance and investment oversight in pension funds through new standards and proactive supervision

No data available for the deliverable: Strengthening governance and investment oversight in pension funds through new standards and proactive supervision

Summary

The reform introduces new conduct standards, proactive supervision, and a phased transition of prudential oversight from the FSCA to the Prudential Authority by March 2026.

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Is it working?

The reform is advancing well, with improved transparency and risk management, but full transition will only be realised by 2026. The FSCA and PA are coordinating closely to ensure a smooth handover and continued member protection.

Actions

The industry is adapting to new standards, and the transition to the PA is progressing, though not yet complete. Ongoing training and compliance reviews are supporting the change.

Are there plans?

New governance standards have been issued, the IRS data system has been upgraded, and a transition plan for oversight is being implemented.

Is it on the agenda?

Pension fund governance is a joint priority for the FSCA and PA, with a detailed transition roadmap and industry engagement process.

Goals

To protect retirement savings by enhancing governance, transparency and risk management in pension funds.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) National Treasury South African Reserve Bank (SARB)

Summary

The reform introduces new conduct standards, proactive supervision and a phased transition of prudential oversight from the FSCA to the Prudential Authority by March 2026. FSCA and SARB/PA introduced new reporting, conduct and investment standards for funds by Q3 2025. Sector protocols for board oversight, investment risk and reporting have been upgraded.
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Canvas not supported.

Is it working?

The reform is advancing well, with improved transparency and risk management, but full transition will be realised only by 2026. The FSCA and PA are coordinating closely to ensure a smooth handover and continued member protection. Remaining gaps in smaller funds are being targeted for the next cycle.

Actions

The industry is adapting to new standards, and the transition to the PA is progressing, though not yet complete. Ongoing training and compliance reviews are supporting the change. Pension fund audits show improved compliance and improved industry practices.

Are there plans?

New governance standards have been issued, the IRS data system has been upgraded and a transition plan for oversight is being implemented. Plans include enforcement audits, regulator training as well as investment reviews.
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Is it on the agenda?

Pension fund governance is a joint priority for the FSCA and PA, with a detailed transition roadmap and industry engagement process. This is entrenched in the FSCA annual sector plan and Parliament fiscal oversight cycles.

Goals

To protect retirement savings by enhancing governance, transparency and risk management in pension funds in order to improve governance and oversight to bolster fund integrity.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) National Treasury South African Reserve Bank (SARB)

Summary

Key deliverables include: (i) full implementation and ongoing refinement of the two‑pot system under the Revenue Laws Amendment Act, 12 of 2024 and the Pension Funds Amendment Act, with FSCA‑approved rule changes and systems upgrades; (ii) enforceable, modernised conditions for benefit administrators under Conduct Standard 2 of 2025 (RF), covering governance, fit‑and‑proper requirements, complaints management, data management and reporting; (iii) an enhanced supervisory and funding model for the Office of the Pensions Adjudicator (OPFA) so that it can handle increased complaint volumes arising from two‑pot and other reforms; and (iv) phased rollout of a central manager and central administrator model for certain retirement assets to drive down costs and improve governance, as signalled in the 2026 Budget.

Canvas not supported.

Is it working?

The shift to the two‑pot system and the new conduct standard for administrators represent major steps toward better governance and member protection. However, implementation risk remains high: administrators and funds must complete complex systems changes, rule amendments and communication campaigns and the FSCA and OPFA must have sufficient capacity to supervise and resolve disputes. The central manager/administrator cost‑reduction proposal is still at an early design stage; its ultimate impact will depend on how governance, accountability and competition are managed to avoid creating new concentration risks while capturing scale economies.

Actions

Steps already taken include: (i) enactment of the two‑pot system legislation (Pension Funds Amendment Bill and Revenue Laws Amendment Act, 2024) with effect from 1 September 2024, supported by National Treasury and FSCA FAQs and guidance; (ii) publication of FSCA Conduct Standard 2 of 2025 (RF): Conditions prescribed in respect of pension fund benefit administrators, together with Communication 15 of 2025 (RF) and FSCA RF Notice 10 of 2025, which overhaul governance, fit‑and‑proper, SLA, complaints‑management, data‑management and record‑keeping requirements for administrators; (iii) FSCA commitments to use proactive supervision and new reporting frameworks to monitor administrators’ compliance and conduct risks; and (iv) OPFA budget and levy‑model proposals for 2025/26 and 2026/27 - aimed at ensuring sufficient resources for its expanded mandate.

Are there plans?

Planned actions include: (i) continued refinement and supervision of two‑pot implementation, including approval of fund‑rule amendments, monitoring of administration quality and member‑communication standards; (ii) development of a reporting framework under Conduct Standard 2 of 2025, which the FSCA will use for off‑site supervision and risk‑based onsite work; (iii) phased implementation of a central manager and central administrator for certain retirement assets, with further policy and design work over the medium term; (iv) potential expansion of regulatory and supervisory scope to include public‑sector and SOE pension funds, informed by prior “Appropriate Framework” policy proposals; and (v) continued strengthening of OPFA capacity and levy‑funding arrangements to ensure timely, effective adjudication of member complaints.
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Is it on the agenda?

The 2026 Budget Review underscores that retirement‑reform implementation – especially the two‑pot system and cost reduction through centralised investment and administration – is a priority for improving household resilience and long‑term savings outcomes. It notes that the first phase of the central manager/administrator reform will focus on retirement funds, which already have established regulatory and governance structures and will be rolled out in phases with appropriate governance arrangements. FSCA confirms that governance and oversight of retirement‑fund administration is a core focus area, with Conduct Standard 2 of 2025 forming a central pillar.

Goals

To strengthen the governance, oversight and administration of retirement funds and their providers so that the two‑pot system, consolidation initiatives and broader retirement‑reform agenda deliver better member outcomes, lower costs and stronger protection of savings.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) National Treasury South African Reserve Bank (SARB)

Summary

Key deliverables include: (i) full implementation and ongoing refinement of the two‑pot system under the Revenue Laws Amendment Act, 12 of 2024 and the Pension Funds Amendment Act, with FSCA‑approved rule changes and systems upgrades; (ii) enforceable, modernised conditions for benefit administrators under Conduct Standard 2 of 2025 (RF), covering governance, fit‑and‑proper requirements, complaints management, data management and reporting; (iii) an enhanced supervisory and funding model for the Office of the Pensions Adjudicator (OPFA) so that it can handle increased complaint volumes arising from two‑pot and other reforms; and (iv) phased rollout of a central manager and central administrator model for certain retirement assets to drive down costs and improve governance, as signalled in the 2026 Budget.

Canvas not supported.

Is it working?

The shift to the two‑pot system and the new conduct standard for administrators represent major steps toward better governance and member protection. However, implementation risk remains high: administrators and funds must complete complex systems changes, rule amendments and communication campaigns and the FSCA and OPFA must have sufficient capacity to supervise and resolve disputes. The central manager/administrator cost‑reduction proposal is still at an early design stage; its ultimate impact will depend on how governance, accountability and competition are managed to avoid creating new concentration risks while capturing scale economies.

Actions

Steps already taken include: (i) enactment of the two‑pot system legislation (Pension Funds Amendment Bill and Revenue Laws Amendment Act, 2024) with effect from 1 September 2024, supported by National Treasury and FSCA FAQs and guidance; (ii) publication of FSCA Conduct Standard 2 of 2025 (RF): Conditions prescribed in respect of pension fund benefit administrators, together with Communication 15 of 2025 (RF) and FSCA RF Notice 10 of 2025, which overhaul governance, fit‑and‑proper, SLA, complaints‑management, data‑management and record‑keeping requirements for administrators; (iii) FSCA commitments to use proactive supervision and new reporting frameworks to monitor administrators’ compliance and conduct risks; and (iv) OPFA budget and levy‑model proposals for 2025/26 and 2026/27 - aimed at ensuring sufficient resources for its expanded mandate.

Are there plans?

Planned actions include: (i) continued refinement and supervision of two‑pot implementation, including approval of fund‑rule amendments, monitoring of administration quality and member‑communication standards; (ii) development of a reporting framework under Conduct Standard 2 of 2025, which the FSCA will use for off‑site supervision and risk‑based onsite work; (iii) phased implementation of a central manager and central administrator for certain retirement assets, with further policy and design work over the medium term; (iv) potential expansion of regulatory and supervisory scope to include public‑sector and SOE pension funds, informed by prior “Appropriate Framework” policy proposals; and (v) continued strengthening of OPFA capacity and levy‑funding arrangements to ensure timely, effective adjudication of member complaints.
rn

Is it on the agenda?

The 2026 Budget Review underscores that retirement‑reform implementation – especially the two‑pot system and cost reduction through centralised investment and administration – is a priority for improving household resilience and long‑term savings outcomes. It notes that the first phase of the central manager/administrator reform will focus on retirement funds, which already have established regulatory and governance structures and will be rolled out in phases with appropriate governance arrangements. FSCA confirms that governance and oversight of retirement‑fund administration is a core focus area, with Conduct Standard 2 of 2025 forming a central pillar.

Goals

To strengthen the governance, oversight and administration of retirement funds and their providers so that the two‑pot system, consolidation initiatives and broader retirement‑reform agenda deliver better member outcomes, lower costs and stronger protection of savings.

References

Departments / Govt Institutions

Financial Sector Conduct Authority (FSCA) National Treasury South African Reserve Bank (SARB)

Analyst: Tinashe Kambadza
Status: in-progress
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