FSCA publishes draft forms for Section 14 transfers in terms of the Pension Funds Act
27 Jun, 2024


Lize de la Harpe, Senior Legal Advisor at Sanlam Corporate




As you may recall, the FSCA in May 2024 published FSCA Communication 18 of 2024 which proposed amendments to FSRA Conduct Standard 1 of 2019 (PFA) which prescribes the conditions for amalgamations and transfers in terms of section 14 of the Pension Funds Act, 1956. Interested parties had until 19 June 2024 to submit comments on the proposed changes.


FSCA Communication 18 of 2024 however did not include revised section 14 application forms – these forms have now been published in FSCA Communication 21 of 2024. This communication also includes clarification on the treatment of section 14 transfers with the implementation of the two-pot system come 1 September 2024.


In this article we will do a quick recap and then look at the proposed changes.


Section 14 transfers


Section 14 of the Pension Funds Act deals with amalgamations and transfers of retirement fund benefits from one fund to another.


In essence, the act sets out two processes for such transfers:


  • Section 14(1) which requires the fund to submit transfer documents to the FSCA for approval; and
  • Section 14(8) transfers, which are exempt from having to submit transfer documents to the FSCA for approval.


The FSRA Conduct Standard 1 of 2019 (PFA) published on 5 August 2019 prescribes certain conditions for amalgamations and transfers, as well as the various application forms that retirement funds must complete when submitting an application in terms of section 14.


Reason for change


The Minister of Finance is in the process of finalising amendments to Regulations under the Act to give effect to the two-pot system which will come into effect on 1 September 2024.


In terms of the two-pot system all funds will be required to distinguish between 3 components, being a vested component (which will consist of all contributions plus fund interest as at 31 August 2024), a savings component (which will consist of 1/3rd of contributions from 1 September 2024 onwards) and a retirement component (which will consist of 2/3rds of all contributions from 1 September 2024 onwards).


Members are allowed to transfer between the different components within the same fund, (subject to limitations) as well as between different retirement funds. As stated above, for transfers between different retirement funds in terms of the section 14(1) process, application forms will have to be submitted to the FSCA.


The current section 14 Conduct Standard does not align with the two-pot regime in so far as the current application forms only allow for a single transfer value. Once the two-pot system is implemented, section 14 forms will need to differentiate between the different components to be transferred.


As such, the communication sets out the proposed changes to the section 14 application forms to cater for this change.


Clarification on the treatment of section 14 transfers with the implementation of the two-pot system


Clarification was needed as to how to treat section 14 transfers over the period of transitioning to the two-pot system in instances where a transfer is still in process on 1 September 2024, and for new transfers as of 1 September 2024. This clarification is vital to ensure that there is consistent treatment across the retirement fund industry while ensuring clear communication to members to manage their expectations.


The communication confirm that’s any fund that has member assets as 1 September 2024 must calculate the seed capital for all members, irrespective of the status of the transfer. The transferor fund will not in all circumstances have to pay savings withdrawal benefits.


However, the membership schedules provided to the transferee fund on transfer of the assets must show the value in the transferor fund as at 1 September 2024 and the calculation of the seed capital.


In order to streamline the application process, the format of the transfer schedule containing the necessary membership details in a standardised format will be determined as set out in Appendix 6 to the communication.


When the two-pot system comes into effect on 1 September 2024, there may be instances where a section 14 transfer is not yet finalised. As per the communication, transfers must be treated as follows:







The revised forms are open for public comment by 31 July 2024 – cutting it very close to the 1 September 2024 implementation date. The successful implementation of the two-pot retirement system remains dependent on the enactment of the Pension Funds Amendment Bill 2024, which still awaits signature.




@Lize de la Harpe, Sanlam
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