BOARD NOTICE FINANCIAL SERVICES BOARD

Transcription

1 BOARD NOTICE No: FINANCIAL SERVICES BOARD CONDITIONS DETERMINED IN RESPECT OF ADMINISTRATORS ACTING ON BEHALF OF PENSION FUNDS IN TERMS OF SECTION 13B OF THE PENSION FUNDS ACT, 1956 The Registrar of Pension Funds has under section 13B of the Pension Funds Act, 1956 (Act No. 24 of 1956), determined the following conditions in respect of administrators acting on behalf of pension funds as set out in the schedule. This Board Notice takes effect on publication hereof and Board Notice 24 of 2002 is hereby withdrawn with effect from the publication hereof. DP TSHIDI Registrar of Pension Funds Page 1 of 23

2 SCHEDULE 1. Definitions In this schedule the Act means the Pension Funds Act, 1956 (Act No. 24 of 1956), any word or expression to which a meaning has been assigned in the Act shall bear the meaning so assigned to it, and, unless the context otherwise indicates- administrator, in relation to a fund, means any juristic person, other than a trust, who has been approved by the Registrar, as a benefit administrator or an investment administrator in terms of subsection (1) of section 13B of the Act; assets in liquid form means, cash or cash equivalents that can be liquidated within seven (7) days without realising a loss on liquidation; auditor, in relation to an administrator, means an auditor registered in terms of the Auditing Profession Act, 2005 (Act No. 26 of 2005); benefit administrator, in relation to a pension fund, means any juristic person, who has been approved by the Registrar to administer pension funds for the disposition of benefits provided for in the rules of the fund; facilitation account, means any account of the administrator into which deposits are received or payments are made on behalf of funds, including any suspense, control and clearing accounts. responsible person, means the person nominated by the administrator who will be in charge of the administration of funds; the FAIS Act, means the Financial Advisory and Intermediaries Services Act No. 37 of 2002; the Regulations means the Regulations published by Government Notice R98 of 26 January 1962, as amended; Page 2 of 23

3 2. Compliance of an investment administrator or investment manager Approval in terms of section 13B of the Act and supervision of investment administrators or investment managers has been delegated to the Registrar of FAIS. Therefore, an investment administrator or investment manager may only provide investment advice or investment services to a pension fund if such investment administrator or investment manager has been approved in terms of section 13B and complies with all the relevant legislation, subordinate legislation and other requirements in terms of the FAIS Act. 3. Compliance with Conditions by Benefit Administrators A benefit administrator shall at all times comply with all the conditions set out in this Notice, unless exemption has been granted in terms of Condition 24 of the Conditions from any of the conditions contained herein. 3.1 An application for approval as a benefit administrator as required in terms of section 13B of the Act, must be submitted and approved by the Registrar prior to commencing administration business and shall consist of at least the following: (c) an application form for approval as a benefit administrator as prescribed in Annexure A; report by the independent auditor on compliance with the conditions of the benefit administrator as set out in Annexure B; and the management representation letter in the format as set out in Annexure C 3.2 Within 6 months of the financial year-end of the benefit administrator the following must be submitted to the Registrar: (c) a copy of the audited financial statements of the benefit administrator; report by the independent auditor on compliance with the conditions of the benefit administrator as set out in Annexure B; and a management representation letter on annual renewal as prescribed in Annexure D. Page 3 of 23

4 3.3 Quarterly returns A quarterly report to the Registrar as set out in Annexure E must be submitted to the Registrar within 30 days from the date of the relevant quarter end. Such quarterly returns shall be for the quarters ending on 31 March, 30 June, 30 September and 31 December with the first submission to be for the quarter ending on 30 September Failure by any benefit administrator to submit the relevant documentation as per conditions 3.2 and 3.3, or where it is evident from such information contained in these documents that a benefit administrator no longer complies with any of the Conditions or not able to perform its duties as benefit administrator adequately, subject to the provisions in Condition 7, the Registrar may consider the suspension or withdrawal of its approval as benefit administrator. 3.5 Penalties for late submission of the annual or any other prescribed returns may be levied by the Registrar in terms of section 37 of the Act. 4. Change of name, registered address, postal address or contact detail of administrator 4.1 The benefit administrator must inform the Registrar of any change in the detail as contained in the initial application form or subsequent annual renewal, within 30 days of such change; The Registrar will only consider approving a change in name where the following information has been obtained: in the case of the benefit administrator being a company or close corporation, proof that the name of the company or close corporation has been approved as required in terms of the Companies Act, No. 71 of 2008 or the Close Corporations Act, No. 69 of 1984; in the case of an entity regulated by a specific authority or regulator, confirmation of the relevant approval of change of name by that authority or regulator; Page 4 of 23

5 (c) (d) in the case of any other entity, an affidavit by the persons in charge of the administrator declaring that the name has changed and reasons for the change in name; proof that there has not been a change of not more than 20% in ownership and/or management of the benefit administrator, as approved in terms of section 13B of the Act. 4.2 Declaration by the responsible person that all funds administered by the benefit administrator have been duly informed of the relevant changes. 5. Outsourcing of administration functions Where a benefit administrator intends to outsource any of its administrative functions, or in any way requires a third party or another entity to perform the administrative functions, which it is required to perform in terms of its contractual arrangements with a fund, the following must be complied with: 5.1 such other person/entity to whom administrative functions will be outsourced, must be duly approved in terms of section 13B of the Act and the Registrar s approval must have been obtained prior to the commencement of the outsourcing arrangement; 5.2 an outsourcing and service level agreement must be in place between the person/entity and the benefit administrator; 5.3 the benefit administrator must inform all funds affected by the outsourcing arrangement and obtain their consent to the outsourcing arrangement prior to the utilisation of such service as well as informing such funds of any additional costs that may be applicable to the outsourcing agreement; 5.4 such outsourcing agreement must be contained in the administration agreement between the benefit administrator and funds affected by such outsourcing arrangement; and 5.5 the administration agreement must state that the appointed benefit administrator shall remain responsible for any of the duties, maintenance of data and record keeping outsourced to any other party and should be addressed in the disaster recovery and business continuity plans of the benefit administrator. Page 5 of 23

6 6. Mergers and Acquisitions 6.1 No benefit administrator or person may acquire the business of an approved administrator or merge the business with any other benefit administrator unless: (c) application for the approval of the merger or acquisition has been made to the Registrar; the Registrar has been furnished with a copy of the relevant agreement in respect of such merger or acquisition as well as any relevant documents as may be required; and the Registrar has approved such acquisition or merger. 6.2 Where any person, other than a benefit administrator approved in terms of section 13B of the Act, wishes to acquire the business of another benefit administrator, such person must apply to the Registrar for approval in terms of section 13B of the Act. 6.3 Where an approved benefit administrator wishes to merge with the business of another benefit administrator, the following information must be submitted to the Registrar prior to the merger or acquisition: whether there will be any change of: the ownership of the benefit administrator acquiring the business; the responsible person as approved in terms of section 13B of the Act; and organisational and management structure of the benefit administrator. (c) whether sufficient processes and procedures are in place to ensure that transfer of business will not detrimentally affect the funds under its administration; the relevant funds whose administration will be transferred to the benefit administrator acquiring the business of another, have been informed and have agreed to the transfer of its administration to the new benefit administrator, if not, such funds must be given the opportunity to transfer their administration to another approved benefit administrator prior to the merger; Page 6 of 23

7 (d) (e) unless agreed to in writing, funds shall not incur additional costs as a result of such merger/acquisition; and an undertaking by the benefit administrator acquiring the business that it takes full responsibility for funds in the acquisition process. Such merger or acquisition shall only take effect once approval has been obtained from the Registrar. 6.4 The affected funds will be required to enter into a new administration agreement. 7. Suspension or withdrawal of approval as an administrator: 7.1 Prior to the suspension or withdrawal of the approval of a benefit administrator, the Registrar shall follow the procedure set out in section 13B(8) of the Act. 7.2 The benefit administrator shall inform all funds of the Registrar s intention to suspend or withdraw the approval and the Registrar may, where in public interest, take the steps he/she deems necessary to inform all affected funds. 7.3 Where the benefit administrator s approval has been suspended, the benefit administrator may not enter into any new or additional agreements with any fund until such time as the Registrar is satisfied that the suspension would no longer be necessary. 7.4 An approval of a benefit administrator by the Registrar shall be deemed to have lapsed where:- the business of the benefit administrator has been dissolved or liquidated and such benefit administrator has complied with the provisions set out in condition 21 of the Conditions; or the Registrar has to the best of his knowledge failed to establish whether a benefit administrator is still performing administration business. Page 7 of 23

8 8. Administration and service level agreement A benefit administrator must enter into an administration agreement and a service level agreement, which is duly authorized and signed, prior to the commencement of administrative functions with regard to a particular fund. 8.1 Administration agreement: The administration agreement to act as a benefit administrator shall at least provide for, where applicable, the following:- (c) (d) (e) that the benefit administrator shall on behalf of the relevant fund administer the collection of contributions, disposition of benefits and maintaining membership and fund records as provided for in the rules of the fund; specify the particular responsibilities of the Board concerned to be delegated to the benefit administrator; specify the duties and timelines within which the duties delegated to the benefit administrator must be performed on behalf of the fund; the remuneration to which a benefit administrator will be entitled to, including any income, directly or indirectly, earned from providing other services to a fund or where other divisions, subsidiaries or associates of the benefit administrator will be earning income from performing certain administrative or other functions for the fund. It must further stipulate the basis on which the administration fee and other income will be calculated; specific conditions relating to the take-on procedures as well as the responsibilities of the relevant parties concerned should be contained in the administration agreement. The following should be considered: (i) (ii) (iii) (iv) duties and responsibilities of the Board; duties and responsibilities of employers; duties and responsibilities of the benefit administrator; financial implications during the transitional period; Page 8 of 23

9 (v) (vi) (vii) (viii) any additional fees payable for services rendered after the termination date; timing, process, method and format of data, records and documents, the assets register, minute books, members records pertaining to the fund, as provided by the Board of the fund or the previous benefit administrators; reports and content thereof, as well as the frequency of information or reporting required; on termination of the administration agreement, the party responsible for the preparation and submission of all statutory returns, maintenance of the data and records, including contributions and/or benefit payments prior to the effective date of the termination of the administration agreement. (f) the requirement that all records pertaining to the administration of the fund remains the sole property of the fund and must be available to the fund within a reasonable period but not exceeding 7 days from the date of request; (g) (h) providing information and reports to the fund to ensure that the fund can be properly managed and complies with statutory reporting requirements; extent of indemnity and fidelity insurance guarantee maintained by the benefit administrator. The benefit administrator must, amongst others, also disclose instances where the indemnity and fidelity insurance guarantee provides for a self-payment gap whereby the benefit administrator would be responsible for any claims up to a certain minimum amount. Such self-payment gap must be appropriately disclosed. A benefit administrator must further disclose any exclusions, limitations or restrictions contained in the fidelity guarantee policy which might affect any claim the fund may have against the administrator. (i) procedure in respect of a breach of any of the conditions contained in the administration agreement; Page 9 of 23

10 (j) (k) (l) (m) (n) (o) (p) (q) (r) where facilitation (trust) accounts will be utilised, that such facilitation (trust) accounts are operated in compliance with Condition 15; agreements in respect of the outsourcing of administrative duties to another benefit administrator, which has been approved in terms of section 13B of the Act, to perform such administration functions, and in terms of which prior approval of the Registrar has been obtained; termination conditions, including a provision which will empower each party to the agreement to terminate the agreement after notice in writing by one party to the other of a period of not more than 90 days; any amendment to the administration agreement shall be in writing and shall be effected by way of an addendum or new agreement between the benefit administrator and the fund; whether the administrator employs a compliance officer or person responsible for monitoring compliance by the benefit administrator with the Act, regulations, conditions and the rules of the fund; adequate processes, procedures and controls to identify, manage, monitor and mitigate risk and ensure the continued implementation and operational effectiveness; ensure that processes and procedures have been designed, implemented and operate effectively to ensure proper governance; procedure for the renegotiation of administration fees and other fees or income payable to the benefit administrator; and fund s obligation to provide the benefit administrator on an ongoing basis with the relevant information in respect of members and employers participating in the fund, which should include at least, but are not limited to, the following: (i) (ii) providing and updating of member data and payment of contributions; procedure and information relating to benefit claims; and Page 10 of 23

11 (iii) notification of any changes in membership data and/or the payroll. 8.2 Service Level Agreement The service level agreement must be duly authorised and signed before the commencement of such services by the relevant parties; The service level agreement shall contain clear duties, responsibilities and timelines for the relevant parties and shall include, but not limited to: (i) administrative procedures such as contribution processing, benefit processing, housing loan administration, transfers in terms of section 14 of the Act, maintenance of data and fund records; (ii) administrative procedures with regard to investments and disinvestments; (iii) management and reconciliation of bank account(s); (iv) processes and procedures in respect of duties and responsibilities delegated to the administrator; (v) a clear and effective communication and reporting procedure with members, employers and the Board; (vi) take-on and handing over procedures; (vii) setting out the penalties applicable to non-compliance to the service level agreement; and (viii) manner and frequency in which the service level agreement will be reviewed. 9. Termination of Administration 9.1 Where the administration agreement is terminated between a fund and a benefit administrator, such benefit administrator and fund shall inform the Registrar in writing, within 30 days of receipt or giving of such notice of termination, including the effective date of the termination. The fund must notify the Registrar of the name and contact detail of the new administrator prior to the effective date of the termination of the administration agreement. Notification of the termination of administration is attached hereto as Annexure F. 9.2 The transferring benefit administrator shall, within the periods as set out herein, provide a fund / newly appointed benefit administrator with all the information, records and data it has in its possession or Page 11 of 23

12 is under its control. Such information, records and data must be provided in an electronic format capable of manipulation by the fund or in any other format, where such information, records and data are not available in electronic format. The information, records and data include, but is not limited to accounting records, trial balance and member records as well as any non-financial data (such as documents of title relating to assets, assets register, minute books, member details, investment choices, salaries, pensioner payroll details, banking details, etc.), as agreed between the benefit administrators within a maximum period of 15 days from the effective date of termination of administration. The transferring benefit administrator will within a further 15 days be responsible to submit to the fund/new benefit administrator a reconciliation of the bank accounts, benefits and contributions as at date of transfer. 9.3 Within 90 days after the effective termination date all other information, data and records shall be transferred to the fund or new administrator in the agreed format, including but not limited to: copies of annual financial statements; valuation reports where applicable; (c) benefit claim forms; (d) contribution schedules; (e) housing loans granted in terms of section 19(5); (f) original signed agreements between the fund and external parties, under the control of the benefit administrator; and (g) all policy documents. 9.4 The Board of the Fund must complete the report as set out in Annexure G and submit such report to the Registrar within 30 days after date of notification. 9.5 The fund or new benefit administrator shall raise any queries in respect of the previous administration with such transferring benefit administrator within 18 months after the termination date. Page 12 of 23

13 10. Appointment of a Responsible Person 10.1 A benefit administrator shall, subject to the approval by the Registrar, nominate a person who shall act as the responsible person for the benefit administrator. The responsible person must ensure compliance by the benefit administrator with the relevant provisions of the Act, conditions contained in this Notice and other applicable legislation; 10.2 Where the appointment of the responsible person has been terminated, the benefit administrator must, within 30 days from the date of termination, notify the Registrar in writing of such termination and include the name and contact details of the newly appointed responsible person Such notification of the change of a responsible person shall be accompanied by a letter of acceptance of the appointment The Registrar, subject to the Promotion of Administrative Justice Act, 2000 (Act No. 3 of 2000), may, if the Registrar reasonably believes that a responsible person is not, or is no longer, a fit and proper person to hold that office, or if it is not in the public interest that the responsible person holds or continues to hold such office, object to such appointment, stating the grounds for the objection, and provide such to the benefit administrator If the Registrar objects to such appointment, the benefit administrator must terminate the appointment within 30 days of the Registrar informing the benefit administrator of the finalisation of the processes and procedures provided for in the Promotion of Administrative Justice Act, 2000 (Act No.3 of 2000) The Registrar may for purposes of assessing if a responsible person is not, or is no longer, a fit and proper person in accordance with paragraph 10.4, have regard to- (c) the competence and soundness of judgment of the person for the fulfilment of the responsibilities of the particular office; the diligence with which the person concerned is likely to fulfil those responsibilities; previous conduct and activities of the person in business or financial matters; and Page 13 of 23

14 (d) any evidence that the person- (i) (ii) (iii) after 27 April 1994 has been convicted in the Republic or elsewhere of theft, fraud, forgery or uttering a forged document, perjury, an offence under the Prevention and Combating of Corrupt Activities Act (Act No. 12 of 2004), an offence under the Prevention of Organised Crime Act, 1998 (Act No. 121 of 1998), or any offence involving dishonesty; has been convicted of an offence committed after the Constitution of the Republic of South Africa, 1993 (Act No. 200 of 1993), took effect, and sentenced to imprisonment without the option of a fine; has contravened the provisions of any law, the object of which is the protection of the public against financial loss; (iv) is a former officer of an institution and whose actions contributed to that entity s inability to pay its debts or caused financial loss; (v) has taken part in any business practices that, in the opinion of the Registrar, were deceitful, prejudicial, or otherwise improper (whether unlawful or not) or which otherwise brought discredit to that person s methods of conducting business; or (vi) has taken part in or been associated with any other business practices, or conduct that casts doubt on his or her competence and soundness of judgement The Registrar may request any person to assist him or her in assessing whether a person is fit and proper to act as a responsible person. Page 14 of 23

15 11. Appointment of Auditor 11.1 A benefit administrator shall, prior to approval, appoint an auditor to report on compliance with the requirements of Section 13B and this Board Notice Where the appointment of an auditor has been terminated the benefit administrator must, within 30 days, notify the Registrar in writing of such termination including the details of the newly appointed auditor Notification of an appointment of an auditor to the Registrar shall be accompanied by a letter of acceptance by such auditor An auditor of a benefit administrator must- Within 21 days of his or her appointment being terminated submit a written report to the registrar detailing the auditor s perceived reasons for the termination; and On becoming aware of any matter relating to the affairs of the benefit administration of funds which, in the opinion of the auditor, may prejudice any fund or its members, inform the registrar thereof in writing. 12. Indemnity and Fidelity Guarantee Insurance A benefit administrator must at all times maintain professional indemnity insurance and fidelity guarantee insurance relative to the complexity and size of its administration business as reported on by the auditor of the administrator. 13. Maintenance of Capital Adequacy and Liquidity 13.1 Capital Adequacy Requirement A benefit administrator is required to maintain a minimum capital of R which may consist of (i) Ordinary share capital issued (ii) Preference share capital issued; (iii) Share premium account (iv) Non-distributable reserves; (v) Retained income as per audited financial statements; (vi) Fixed assets, net of related secured loans; Page 15 of 23

16 (c) the prescribed amount may be reduced by such proportions as is already covered by the liquidity requirement as set out in par 13.2; where the benefit administrator has obtained a license or approval in terms of any legislation under the supervision of the Financial Services Board, whereby a capital adequacy requirement exists, the higher of the R or such other capital amount must be maintained Maintenance of Liquidity In respect of a benefit administrator the following conditions will apply: (c) (d) For purposes of this condition, assets in liquid form shall mean assets which are capable of being realised or recovered within a period not exceeding 7days, but shall not include any fixed assets; A benefit administrator shall at any time maintain current assets (excluding any goodwill, guarantees and inter-company loans) which are equal to or greater than current liabilities. The benefit administrator shall at any time maintain assets in liquid form equal to or greater than 13/52 of annual expenditure. Where a benefit administrator has obtained a license or approval under the supervision of the Financial Services Board and is subject to a liquidity requirement in terms of any other legislation, the higher of the prescribed liquidity requirement must be maintained. 14. Administration of Fund Moneys A benefit administrator shall deposit any pension fund moneys, not later than the business day following the date of receipt thereof, into a bank account opened in the name of the pension fund concerned or, in the case of underwritten funds, in the facilitation account of the relevant insurer. Page 16 of 23

17 15. Facilitation (trust) Account Where a benefit administrator utilises any form of a facilitation account ( trust ) whereby money is received on behalf of or, for payments to be made on behalf of any fund, the following conditions must be complied with 15.1 a dedicated interest bearing banking account must be opened by the benefit administrator to accept moneys and to pay benefits on behalf of the funds with a registered bank; 15.2 such trust account must be held in such a way that such assets shall not form part of the benefit administrator s assets; 15.3 where contributions and other amounts received and identified belonging to a specific fund must be allocated to the relevant fund, or sub fund within 48 hours; 15.4 where contributions have been received and the administrator is unable to identify and allocate such contributions to a specific fund, such amounts must be investigated within 48 hours. Any amounts not allocated within 30 days from receipt thereof must be reported to the responsible person of the benefit administrator. The responsible person must ensure that all action has been taken to resolve any unallocated amounts. Any such unallocated amounts must at year-end be reported in Annexure B to the Registrar; 15.5 on identification and allocation of any previously unallocated amounts, any interest earned, from date of receipt until date of transfer or payment to the fund account, on such unallocated amounts shall be paid to such fund within 7 business days after the end of the month following such allocation; 15.6 in the case where a benefit payable to a beneficiary is made through the administrator s trust account, such benefit must be transferred or paid within 24 hours from when the deposit is made in the trust account; 15.7 where a payment to a beneficiary is rejected by a bank or a payment is returned unpaid to the facilitation account, such amount must be transferred or paid back to the relevant fund within 24 hours thereof; 15.8 reconciliations must be performed on the facilitation account on a daily basis and should be reviewed by the responsible person on a monthly basis; and Page 17 of 23

18 15.9 reconciling items need to be clearly identified and resolved within 7 working days after the reconciliation has been performed. 16. Safe Custody of Documents of Title Whenever a document of title relating to assets held by a fund or to be held in custody on behalf of a fund by virtue of the fund s registered office being the address of a benefit administrator, comes into possession of the benefit administrator, the latter shall make adequate arrangements to ensure the continued safety of the documents of title held in safe custody and shall mark such document forthwith in a manner which will render it possible at all time to establish readily that the fund is owner of such assets, and the benefit administrator shall maintain a register to identify ownership of assets. 17. Furnishing of other relevant information The Registrar may request the benefit administrator to furnish certain information within a reasonable time. 18. Change in owners, shareholders, directors, partners or members Where there is a change in owners, directors, partners, members or shareholders having the effect of a change of de facto control of the benefit administrator prior approval must be obtained from the Registrar. 19. Financial Accounting, Procedures and Controls 19.1 Any administration performed on behalf of funds must be conducted in accordance with the provisions of the Act, the rules of the fund, these Conditions and any other relevant legislation All financial procedures must be recorded to ensure that the benefit administrator and the funds are able to report in terms of applicable accounting and reporting requirements Where applicable, the benefit administrator must ensure that all functions regarding the management of the funds bank accounts and facilitation accounts are performed in terms of the Act and the conditions, where applicable; Page 18 of 23

19 19.4 General administration procedures, accounting transactions and risk control measures must be in place to ensure accurate, complete and timeous processing of data, information reporting, the assurance of data integrity and safeguarding of funds records and data; and 19.5 Benefit administrators must ensure that there are proper internal control systems in place. These systems must be monitored and managed by the benefit administrator. 20. Systems 20.1 The benefit administrator must ensure that the administration systems utilised for the performance of the administrative functions are adequate, including specific provision where a benefit administrator intends to perform the administration of the following types of funds: umbrella funds; retirement annuity funds, beneficiary funds, unclaimed benefit funds, pension preservation funds and provident preservation funds; and individual investment choice to members of funds The lease or purchase agreement in respect of systems utilised by the benefit administrator must state that all records and data in respect of the fund which were maintained on that system will be secured at the termination of such agreement and shall remain the property of the fund/s Systems must be sufficient to provide sufficient information as the Board may require for the proper management of the fund as well as all relevant information to enable the Board to comply with any reporting requirements in terms of any law Systems must further ensure accurate record keeping, proper members records and ensure adequate member communication. Page 19 of 23

20 20.5 The benefit administrator must ensure that the following procedures and controls are included, but not limited to in their internal control structure: (c) (d) (e) (f) (g) (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) implementation of new funds month-end reporting procedures information reporting segregation of duties, roles and responsibilities application of logical access security access rights and data security physical security business requirements, processing and control, and technical documentation system application testing; service Level agreements with all external parties disaster recovery and back-up procedures; business continuity plan. maintenance of static data at fund- and individual member level, where applicable; contributions and reconciliation of contribution schedules; loading of new member data; assessment and payment of claims; housing loan administration, where applicable; pensioner payroll administration; 20.6 The benefit administrator must ensure that the necessary system controls and compliance measures are in place to manage and monitor the relevant system in use Where a benefit administrator intends to migrate the administration system utilised for administration purposes to another administration system, the Registrar must be notified of the intention, prior to implementation of such migration. The notification to the Registrar is set out in Annexure H, confirming that such new system complies with these requirements Prior to a benefit administrator migrating from one system to another, all funds affected by such migration must be informed of such migration Within 6 months of the finalisation of the migration of systems, the auditor must perform an audit confirming that the migration of systems has been completed and report their findings to the Registrar. Page 20 of 23

21 21. Ceasing, Dissolution or Liquidation of Business When a benefit administrator intends ceasing to conduct business or its business is dissolved or liquidated, 21.1 the benefit administrator must inform all the funds under its administration of its intention to cease to conduct administration business; 21.2 the benefit administrator must transfer all records and documentation as set out in Condition 9 to the Board concerned or the new administrators, as the case may be; 21.3 The auditor of the benefit administrator must provide a report as set out in Annexure I, within 120 days after the date of ceasing to conduct administration business, to the Registrar confirming that: the requirements set out in Condition 9 have been met; where an administrator failed to comply or not able to comply, provide full particulars about the documents or records which were not provided, the reasons therefore as well as the proposed plan with relevant dates on which compliance will take place. 22. Directors, owners, partner or shareholder with a shareholding of more than 20% of a benefit administrator can be held personally liable for any claims after business has ceased. 23. Implementation The conditions set out in this Notice takes effect on publication thereof, however, administrators who at the commencement date of this Board Notice, have already been approved, must comply with the requirements of Condition 13 within 12 months from the effective date this Notice. 24. Exemptions The registrar may on application, exempt a benefit administrator from certain conditions, subject to such requirements as the Registrar may determine. Page 21 of 23

22 25. Commencement repeals and short title In this Condition (c) commencement date, in relation to these Conditions, means the date of commencement of these Conditions; previous Conditions means the Conditions made in respect of Administrators acting on behalf of Pension Funds, published by Board Notice 24 of 2002 in Gazette No of 24 November 1995; and promulgation date, in relation to these Conditions, means the date on which these Conditions are first published in the Gazette. These Conditions are called the Conditions for Administration of Pension Funds. Page 22 of 23

23 Annexures to the Conditions: Annexure A Annexure B Application for approval as a benefit administrator in terms of section 13B of the Pension Funds Act, 1956 Report of the independent auditor on compliance with the Conditions in respect of a benefit administrator Annexure C Annexure D Management representation letter on application for registration in terms of section 13B Management representation letter on annual renewal Annexure E Quarterly Report to the Registrar Annexure F Notification to the Registrar of the termination of administration to/by a benefit administrator Annexure G Declaration by the Board of Management for termination of administration services and hand-over of documents, data and records Annexure H Management representation letter in terms of Conditions 20.7 of the Conditions Annexure I Report by the auditor of the administrator in accordance with condition 21.3 of the Conditions where the administrator cease to perform administration business Page 23 of 23