Vickie Lange: Head: Corporate Best Practice at Alexforbes

Retirement funds have long played a central role in improving members’ financial understanding and helping them navigate financial decisions, often through newsletters, benefit statements, benefits counselling, general communication and educational content.

Now, with the introduction of the FSCA’s Conduct Standard 1 of 2025: Requirements for Financial Institutions Providing Financial Education Initiatives, trustees must reassess how their educational activities fit within the new regulatory framework.

The conduct standard aims to ensure that financial education initiatives provided by financial institutions are appropriate, effective and support customers in making better financial decisions. Although the standard does not require financial institutions to offer financial education initiatives, it sets clear expectations for those who choose to do so.

Understanding the conduct standard

The purpose is twofold:

1. Enhance customer decision‑making by ensuring educational initiatives help individuals understand financial concepts, risks and options.
2. Raise governance standards by requiring institutions to design, implement, monitor and evaluate the effectiveness of financial education initiatives and report to the FSCA.

These definitions are key to practical application:

• Financial education is broadly defined and includes content that helps customers better understand financial products, services, concepts, risks and opportunities.
• A financial education initiative refers to any programme or activity aimed at delivering financial education, as long as it is not marketing or specific product, service, or provider information.

This determines whether an educational activity is in scope of the conduct standard and if it is, it must comply with the requirements.

What this means for retirement funds

Retirement funds are both financial institutions and financial products under the Financial Sector Regulation Act. Therefore, if a retirement fund provides financial education initiatives, it must comply with the conduct standard by 26 March 2026.

Even when financial education is outsourced to service providers, trustees remain accountable for compliance.

What’s not in scope?

For most retirement funds, the impact is limited. The FSCA has clarified that any communication aimed at improving understanding of a specific retirement fund, including benefits and processes, is not a financial education initiative. Therefore, member booklets, newsletters, fund-specific guides and benefit counselling fall outside the conduct standard.

Retirement benefits counselling, regulated under Regulations 37 to 39 of the Pension Funds Act, includes explanations about investment strategies, annuity options, preservation options, and other options such as contribution rates. Because these are specific to the fund, they are not financial education initiatives.

What could fall within scope?

A fund may provide general financial education not tied to its own rules or benefits. For example:

• General content about retirement savings principles
• Money management and budgeting
• Savings and investment basics
• Understanding wills and beneficiary nominations

If the topic is financial in nature, not specific to the fund and meets the criteria of a programme or initiative, it may be considered a financial education initiative and therefore fall within scope.

What trustees should do

To prepare, boards should take the following steps:

1. Understand the conduct standard and its practical implications.
2. Assess whether the fund provides any financial education initiatives, beyond fund‑specific communication.
3. Engage service providers about any educational activities provided to the fund.
4. Consider implementing a member education policy that outlines objectives and governance.
5. Develop a member education plan and budget where applicable.
6. Prepare for possible FSCA supervisory engagement on the topic.
7. Seek guidance from the fund’s advisers or consultants where needed.

Looking ahead

Financial education is an important contributor to improved member outcomes, but it is not the only one. Retirement funds should continue to support members through:

• Retirement benefits counselling
• Accessible financial advice and guidance
• Well‑designed benefit structures and employer-supported solutions
• Ongoing policy enhancements informed by broader retirement reform

Ultimately, a sustainable, member‑focused retirement fund recognises the interconnected factors that influence financial decision‑making. The conduct standard provides an opportunity to strengthen educational efforts while reinforcing good governance, contributing to better financial well‑being for South Africans.

It is a reminder that retirement funds do more than hold members’ savings, they help shape their financial futures.

ENDS