BOARD NOTICE FINANCIAL SERVICES BOARD

Transcription

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 This Board Notice takes effect on and Board Notice 24 of 2002 is hereby withdrawn with effect from the publication hereof.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

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 pension 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 - (i) (ii) a deposit; any other money market instrument that can be converted into cash within seven days without prejudice to a fund, provided that any exposure to an entity created through the inclusion of assets in liquid form must be added to any other exposure to the same entity for the purposes of calculation any limit prescribed in this Regulation; auditor, in relation to an administrator, means an auditor registered in terms of the Auditing Profession Act, 2005 (Act No. 26 of 2005); beneficiary fund, means a beneficiary fund as defined in the Act; benefit administrator, in relation to a pension fund, means any juristic person, other than a trust, who has been approved by the Registrar to administer pension funds, including membership data, contributions, benefits, expenses and financial reporting. Board, in relation to the pension fund, means the board of the fund referred to in section 7A of the Act; COSO framework means the control environment provides an atmosphere in which people conduct their activities and carry out their control responsibilities. The control environment sets the tone of the organisation by influencing the control consciousness of its people. It is the foundation for all other components of internal control, providing discipline and structure. Control environment factors include the integrity, ethical values, and competence of the entity s people; management s philosophy and operating style; the way management assigns authority and responsibility; the way management organises and develops its Page 2 of 24

3 people; and the attention and direction provided by the audit committee and board of directors; the FAIS Act, means the Financial Advisory and Intermediaries Services Act No. 37 of 2002; investment administrator, in relation to a pension fund, means any juristic person, other than a trust, who has been approved as a category II (discretionary) financial services provider in terms of the FAIS Act to perform the investment management and accounting functions of such investments on behalf of pension funds. management executive, means the chief executive officer or such person in charge of the administrator or such persons reporting directly to the chief executive officer or where the administrator of the employee benefits is performed within a division of the administrator such persons responsible for the management of the administrative functions reporting directly to such chief executive officer or the person responsible for the management of the administrative functions; money market instruments, means a transferable and acknowledging indebtedness and is defined as:- (i) (ii) banker s acceptance means a bill as defined in the Bills of Exchange Act, 1964 (Act No. 34 of 1964), drawn on and accepted by a bank as defined in the Banks Acts, 1990 (Act No. 94 of 1990), or a mutual bank as defined in the Mutual Banks Act, 1993 (Act No. 124 of 1993); bridging bond means an acknowledgement of debt in which the issuer thereof undertakes to repay the debt together with interest on the maturity of the debt to the holder of the bridging bond; (iii) commercial paper means any negotiable acknowledgement of debt; (iv) debenture means a debenture as defined in the Companies Act, 2008 (Act No. 71 of 2008); (v) deposit means a deposit as defined in the Banks Act, 1990, or in the Mutual Banks Act, 1993; (vi) Islamic liquidity management financial instrument means a financial instrument that is issued by a bank or a foreign bank (aa) that is negotiable; and (bb) in respect of which the title to the underlying tangible asset or assets pass from a fund to a third party within seven business days from the date of purchase thereof, and at which purchase date the future sale price of the tangible asset or assets is fixed despite any increase or decrease in the market value thereof; Page 3 of 24

4 (vii) land bank bill means a bill or note as defined in the Bills of Exchange Act, 1964, drawn, accepted or issued by the Land and Agricultural Bank of South Africa; (viii) "national housing bill" means a bill or note as defined in the Bills of Exchange Act, 1964, drawn, accepted or issued by the National Housing Board; (ix) "negotiable certificate of deposit" means a certificate of deposit issued by a bank as defined in the Banks Act, 1990, or a mutual bank as defined in the Mutual Banks Act, 1993, and payable to order or to bearer; (x) "parastatal bill" means a bill or note as defined in the Bills of Exchange Act, 1964, drawn, accepted or issued by a parastatal institution; (xi) "promissory note" means a promissory note as defined in the Bills of Exchange Act, 1964; (xii) "trade bill" or "trade note" means a bill or note as defined in the Bills of Exchange Act, 1964, drawn, accepted or issued to provide for the payment for goods; (xiii) "treasury bill" means a bill drawn by the Government on the Secretary to the Treasury calling on the latter to pay a sum certain in money to a specified person or his order or to bearer, on demand or on a certain specified future date; pension fund means a pension fund organisation as defined in the Act; pension fund monies means contributions, investment income, amounts received upon the sale or realisation of assets, transfers, commission or any other receipts of whatever nature; Pension Preservation Fund as defined in the Income Tax Act 1962 (Act No. 58 of 1962); privately administered funds means a pension fund other than an underwritten fund; Provident Preservation Fund as defined in the Income Tax Act 1962 (Act No. 58 of 1962); responsible person, means the person nominated by the administrator who will be in charge of the administration of pension funds Retirement Annuity as defined in the Income Tax Act 1962 (Act No. 58 of 1962); the Regulations means the Regulations published by Government Notice R98 of 26 January 1962, as amended; Page 4 of 24

5 Facilitation account means any account into which deposits are received or payments are made on behalf of funds, including any suspense, control, and clearing accounts; underwritten fund means a pension fund whose assets consist only of claims against one or more insurers and where applicable, demutualisation shares issued to the fund when the insurer demutualised to become a public company ( demutualisation shares ), as well as capitalisation shares allotted in respect of demutualisation shares in place of cash dividends or otherwise ( capitalisation shares ); umbrella funds, means a pension fund organisation, established for the benefit of employees of various employers, which are not subsidiaries of a single holding company. 2. Compliance of an investment administrator Any investment administrator may only provide services as an investment administrator or investment manager to a pension fund if such investment administrator or investment manager is registered as a Category II (discretionary) financial services provider in terms of the FAIS Act and obtained the relevant approval in terms of section 13B of the Act. Such approved investment administrator shall at all times comply with all the relevant legislation, subordinate legislation and other requirements in terms of the FAIS Act and any other applicable legislation. 3. Compliance with Conditions by Benefit Administrators A benefit administrator shall at all times comply with the provisions of these Conditions as may be applicable to the administrator, unless, and to the extent that, the Registrar has under section 13B(4) of the Act, granted any exemption to the administrator. 3.1 An application for approval as a benefit administrator as required in terms of section 13B must be submitted to the Registrar prior to commencing administration business and shall consist of at least the following: (a) (b) an application form as prescribed in Annexure A and the assessment of the processes and procedures of the administrator set out in Annexure B; and a letter from the management of the administrator in the format set out in Annexure C; and Page 5 of 24

6 (c) a duly completed and certified auditor s report set out in Annexure D. 3.2 Within 6 months of the financial year-end of the administrator the following must be submitted to the Registrar: (a) (b) An application for annual renewal as prescribed in Annexure E and the annual reassessment of the processes and procedures of the administrator as set out in Annexure F; and A letter from management of the administrator in the format prescribed Annexure G; and (c) An auditor s report in the format prescribed in Annexure H. 3.3 Failure by any administrator to submit the relevant documentation as per paragraph 3.2, or where it is evident from such information contained in these documents that an administrator is no longer in compliance with the Conditions or not able to perform its duties as administrator adequately, subject to the provisions in Condition 7, the Registrar may consider the suspension or cancellation of its approval as administrator. 3.4 Other returns required by the Registrar A quarterly return as prescribed by the Registrar by Board Notice must be submitted within 30 days from the date of the relevant quarter end. Such quarterly returns shall be for the quarters ended on 31 March, 30 June, 30 September and 31 December. 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 An administrator must inform the Registrar of any change in the name, registered address, postal address or contact detail of the administrator within 30 days from the effective date of such change. The Registrar will only consider approving a change in name where the following information has been obtained: Page 6 of 24

7 (a) (b) (c) (d) in the case of the administrator being a company or close corporation, proof that the name of the company or close corporation has been approved by the Registrar of Companies; 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; 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 in ownership and/or management of the administrator as approved in terms of section 13B. 4.2 Proof that all funds being administered by the administrator have been duly informed about the relevant changes. 5. Outsourcing of administration functions Where an administrator intends to outsource any of its administrative functions, the following must be complied with: 5.1 such other person/institution to whom administrative functions will be outsourced to, must be duly approved in terms of section 13B and the Registrar s approval has been obtained prior to the commencement of the outsourcing arrangement; 5.2 an outsourcing and service level agreement must be in place between the external service provider and the administrator; 5.3 the administrator must inform 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 might be applicable in future, including future changes to the outsourcing agreement; 5.4 such outsourcing agreement must be contained in the administration agreement between the administrator and funds affected by such outsourcing agreement; and Page 7 of 24

8 5.5 the administration agreement must state that the appointed administrator shall remain responsible for any of the duties and record keeping outsourced to any other party and should be addressed in the disaster recovery and business continuity plans of the administrator. 6. Mergers and Acquisitions 6.1 No administrator or person may acquire the business of an approved administrator or merge the business of more than one administrator unless: (a) (b) (c) due notification has been given to the Registrar; the Registrar has been furnished with a copy of the relevant agreement in respect of such merger or acquisition; and the Registrar has approved such acquisition or merger. 6.2 Where any person except for an administrator approved in terms of section 13B wishes to acquire the business of another administrator, such person must apply to the Registrar for approval in terms of section 13B. 6.3 Where an approved administrator wishes to merge with the business of another administrator, the following must be submitted to the Registrar prior to the merger or acquisition: (a) whether there will be any change of: the ownership of the administrator acquiring the business; the responsible person as approved in terms of section 13B; and organizational and management structure of the administrator. (b) (c) whether sufficient processes and procedures are in place to ensure that transfer of business will not detrimentally affect the funds under its administration; funds whose administration will be transferred to the administrator acquiring the business of another, have been informed and have agreed to the transfer of its administration to the new administrator, if not, such funds must be given the Page 8 of 24

9 opportunity to transfer its administration to another administrator prior to the merger; (d) (e) unless agreed to in writing, funds shall not incur additional costs as a result of such merger; and an undertaking by the 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. 7. Suspension or withdrawal of approval as an administration: 7.1 If the Registrar, after an inspection or investigation under section 25, considers that the interests of the members of a fund or the public so require, the Registrar may give notice to an administrator of the intention to suspend or withdraw the approval granted to the administrator. 7.2 Such administrator must within 30 days, or such other period as agreed to by the Registrar, of such notification furnish the Registrar with written reasons why the approval as administrator should not be withdrawn. 7.3 Where the Registrar has notified to an administrator that its approval is suspended, the Registrar may allow such administrator to continue to provide services to funds under its administration subsequent to the date of suspension, but the administrator shall not enter into any agreements to provide any new or additional services to any fund until the Registrar is satisfied that the further suspension or withdrawal of an approval would not be necessary. 7.4 The Registrar shall, where no satisfactory reasons have been furnished, confirm the suspension or withdrawal. 7.5 The administrator shall inform all clients of the withdrawal of approval and the Registrar may, where in public interest, take the steps he/she deems necessary to inform all affected funds. The Registrar may also notify any other regulatory bodies. 7.6 An approval of an administrator by the Registrar shall be deemed to have lapsed where the business of the administrator has been dissolved or liquidated and such administrator has complied with the provisions set out in condition 21 of the Conditions. Page 9 of 24

10 8. Administration and service level agreement Prior to the commencement of administrative functions with regard to a particular fund, an administrator shall enter into a written administration and service level agreement. 8.1 Administration agreement: The administration agreement to act as a benefit administrator shall at least provide for, but not limited to- (a) (b) (c) (d) (e) that the 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 administrator; specify the duties and timelines within which the administrator must perform on behalf of the fund; the remuneration to which an 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 administrator will be earning income from performing certain administrative or other functions to 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 administrator; financial implications during the transitional period; Page 10 of 24

11 (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) any additional fees payable for services rendered after the termination date; dates and address of the delivery of all the relevant fund documentation and records; list of records and documents of title relating to assets, the assets register, minute books, members records and other records pertaining to the fund which must be delivered to the board of management or the newly appointed administrators, as per the fund s Board requirements; reports and content of thereof, as well as the frequency of information or reporting required; party responsible for the preparation and submission of all regulatory returns during the period of transfer (including but not limited to the administrator responsible for the submission of the annual financial statements); penalties and levies that became payable on behalf of the fund in respect of the period prior to the termination date will be the responsibility of the previous administrator unless agreed otherwise; the agreement must make provision for any contributions and/or benefit payments to be processed in the month prior and to be processed in the month following the effective date of termination; data takeover financial information; and timing of take-on and termination of administration. (f) (g) 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; providing information and reports to the fund to ensure that the fund can be properly managed and complies with regulatory reporting requirements; Page 11 of 24

12 (h) (i) (j) (k) (l) (m) (n) (o) (p) (q) (r) (s) (t) indemnity and fidelity guarantee in respect of the administrator; procedure in respect of a breach of administration conditions; where trust accounts will be utilised, that such trust accounts are operated in compliance with Condition 14; agreements in respect of the outsourcing of administrative duties to another administrator, which has been approved in terms of section 13B to perform such administration services, 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 administrator and the fund; disclosure of the responsibility of the administrator to report irregularities, contraventions and concerns to the Registrar and auditor of the fund; whether the administrator employs a compliance officer or person responsible to monitor compliance with the Act, regulations and rules of the fund; whether or not there is a process for identifying and monitoring and managing risk; disclose whether or not the administrator has a code of professional conduct; procedure for the renegotiation of administration and other fees or income payable to the administrator; conditions specifying compliance, risk controls, accuracy and integrity of processing and information; an undertaking by the fund to provide the administrator on an ongoing basis with the relevant contract/agreement between Page 12 of 24

13 the fund and the relevant participating employers, which should include at least, but not limited to, the following: (i) providing and updating of member data and payment of contributions; (ii) procedure and information relating to benefit claims; (iii) notification of any changes in membership data and/or the payroll. 8.2 Service Level Agreement (a) (b) The service level agreement must be signed before the commencement of such services by both parties; The service level agreement shall contain clear roles, responsibilities and timelines for the relevant parties and shall include, but not limited to: (i) (ii) (iii) (iv) (v) for the purposes of a benefit administrator, detail in respect of all the relevant agreed requirements, as per client agreement, such as contribution processing, benefit processing, housing loan administration, financial accounting, information and reporting, business continuity, investments and disinvestments, bank account management, authorised personnel, communications and service level reviews; define the applicable and acceptable time standards for the set requirements; a clear and effective communication and reporting procedure; set out all the relevant information such as bank account details, contact details etc; set out the penalties applicable to non-compliance; and (vi) where a trust account will be utilised, the administrator s responsibility in respect of the management of such account in compliance with Condition 15. Page 13 of 24

14 9. Termination of Administration 9.1 Where the administration agreement is terminated between a pension fund and an administrator, such 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 notification by the fund must include the name and contact detail of the new administrator. Notification of the termination of administration is attached hereto as Annexure J. 9.2 The transferring administrator shall within a reasonable time provide a fund / newly appointed administrator with all the information it has in its possession or is under its control and provide such information in an electronic format capable of manipulation by the fund or in any other format, if the information is not available in electronic format. This information include, but 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 administrators within a maximum period of 15 business days from the effective date of termination of administration. The transferring administrator will within a further 15 days be responsible to submit to the fund reconciliation of the bank statements, benefits and contributions as at date of transfer. 9.3 Within 60 days after the effective termination date all other relevant information shall be transferred to the fund or new administrator in the agreed format, including but not limited to: (a) copies of annual financial statements; (b) valuation reports where applicable; (c) benefit claim forms; (d) contribution schedules; (e) housing loans granted in terms of section 19(5); (f) signed agreements; (g) any applicable policy documents; and (h) any other relevant documentation. 9.4 The transferring administrator must complete the report as set out in Annexure I and must provide such report to the fund or new administrator within 15 days from the date of termination of administration. Page 14 of 24

15 9.5 The fund or new administrator shall raise any queries in respect of the previous administration with such transferring administrator within 18 months after the termination date. 10. Appointment of a Responsible Person 10.1 An administrator shall nominate a person responsible for the administrator prior to the application for approval in terms of section 13B Where the appointment of the responsible person has been terminated the administrator must, within 30 days from the date of termination as the responsible person, notify the Registrar in writing of such termination including 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 by the relevant person 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 administrator If the Registrar objects to such appointment, the administrator must terminate the appointment within 30 days of the Registrar informing the 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- (a) (b) (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 15 of 24

16 (d) any evidence that the person- (i) (ii) 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; (iii) 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 16 of 24

17 11. Appointment of Auditor An administrator shall appoint an auditor prior to approval to certify compliance with the requirements of Section 13B and this Board Notice. Where the appointment of an auditor has been terminated the 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 of the appointment by the auditor. 12. Indemnity and Fidelity Guarantee Insurance An administrator shall take out and maintain professional indemnity insurance and fidelity guarantee insurance relative to the complexity and size of its administration business as agreed with the auditor of the administrator. 13. Maintenance of current assets and liquidity 13.1 A benefit administrator or where the benefit administrator is a division of a company or a group, the following conditions will apply: current assets means assets which are capable of being realised or recovered within a period not exceeding 12 months, but shall not include any fixed assets; 13.2 An administrator shall at any time maintain current assets (excluding any goodwill and inter-company loans) which are equal to or greater than current liabilities. Where an administrator is a division of a group, the group shall maintain at any time current assets equal to or greater than current liabilities in respect of the division responsible for the administration of pension funds An administrator or a group of which the administrator is a division, shall at any time maintain assets in liquid form equal to or greater than 13/52 of annual expenditure. These assets in liquid form must be held separately as a guarantee Such liquidity requirement must be held in such a way that such assets shall not form part of the administrator s assets. Page 17 of 24

18 13.5 For investment managers, the conditions will be specified under the FAIS Act. 14. Administration of Fund Moneys An 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 bank account of the relevant insurer. 15. Facilitation (trust) Account Where an administrator utilises any form of facilitation ( trust ) account whereby money is received on behalf of or utilised to facilitate payments 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 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 administrator s assets; 15.3 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 in terms of section 13B. The responsible person must ensure that all action has been taken to resolve any unallocated amounts. Any such unallocated amounts must at yearend be reported on in the annual reassessment of processes and procedures (Annexure F) 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; Page 18 of 24

19 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, 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 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 an administrator, comes into possession of the 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 administrator shall maintain a register to identify ownership of assets. 17. Furnishing of other relevant information The Registrar may request an administrator to furnish certain information within a reasonable time. 18. Change in shareholders, directors, partners or senior employees Where there is a change in owners, directors, members or shareholders having the effect of a change of de facto control of the administrator in question for approval in terms of section 13B, the administrator must within 90 days after the effective date of such change apply to the Registrar for approval in terms of section 13B. Such an application will be regarded as an application for a new administrator and the relevant application process will be followed. Page 19 of 24

20 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 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 bank accounts are performed in terms of the Act; 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 fund records and data; 19.5 Administrators must ensure that a proper internal control system is in place, monitored and managed by a suitable compliance function within the administrator. 20. Systems 20.1 The systems utilised by the administrator for the performance of the administrative functions must be adequate for the administration requirements. Where an administrator further intends performing the administration of the following types of funds, the relevant system should further ensure that accurate and complete data and records are maintained in respect of: 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 Systems must be sufficient to provide the relevant information to ensure compliance with requirements of any reporting requirements in terms of any law. Page 20 of 24

21 20.3 Systems must further ensure accurate record keeping, accurate and complete members records are maintained and proper member communication The administrator must ensure that the following procedures and controls are included, but not limited to in their internal control structure: (a) (b) (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; Contribution and collection of payments; Loading of new member data; Assessment and payment of claims; Housing loan administration; Pensioner payroll administration; 20.5 The administrator must ensure that the necessary system controls and compliance measures are in place to manage and monitor the relevant system in use Where an administrator intends to replace the system utilised for administration purposes, the Registrar must be informed prior to such change in systems and must be accompanied by a certificate by the auditor of the administrator confirming that such new system complies with these requirements. The lease or purchase agreement in respect of systems utilised by the 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. Page 21 of 24

22 20.7 Where an administrator intends to migrate from one system to another, all funds affected by such migration must be informed of such migration and the auditor must perform an audit on the migration of systems which must be submitted to the Registrar within 6 months after the commencement of such migration. 21. Ceasing, Dissolution or Liquidation of Business When an administrator intends ceasing to conduct business or its business is dissolved or liquidated, 21.1 the administrator must inform all the funds under its administration of its intention to cease administration; 21.2 the 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 administrator must provide a report, within 90 days after the date of ceasing to performing administration business, to the Registrar confirming that: (a) (b) the requirements set out in conditions 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. Registrar may appoint administrator Where an administrator has been liquidated, dissolved, ceased to conduct business or had its approval as administrator withdrawn by the Registrar, the Registrar may appoint an administrator to administer the fund where such fund, after 90 day notification by the Registrar, failed to appoint an administrator. 23. Implementation Administrators who at the commencement date of this Board Notice, have already been approved, must comply with the minimum requirements within 6 months from the effective date of the Board Notice. Page 22 of 24

23 24. Commencement repeals and short title In this Condition (a) commencement date, in relation to these Conditions, means the date of commencement of these Conditions; (b) 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 (c) 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. Annexures to the Conditions: Annexure A Annexure B Annexure C Annexure D Annexure E Annexure F Annexure G Annexure H Annexure I Annexure J Application for approval as a benefit administrator in terms of section 13B of the Pension Funds Act, 1956 Initial assessment of processes and procedures Management representation letter on application for registration in terms of section 13B Audit report on application for approval (to be drafted by IRBA) Application for annual renewal of the approval as a benefit administrator in terms of section 13B of the Pension Funds Act, 1956 Annual reassessment of processes and procedures Management representation letter on annual renewal Annual audit report (to be drafted by IRBA) Schedule for termination of administration Declaration by the Board of Management for the termination of administration services and hand-over of documents, data and records Page 23 of 24

24 Page 24 of 24