Russel Michaels at the FSB, provides some clarity on sections 14 transfers, specifically when there are delays between the two funds.
Michaels says that where brokers and administrators miss deadlines, these may be reported to the registrars, at Pensions Surveillance and the Enforcement department of the FSB, who will investigate the matter.
He confirmed that the registrar can issue administrative penalties to parties that are in contravention of the Act.
In terms of Section 14(1) of the Pension Funds Act astipulates that no transfer of business may take place between a registered fund and another registered fund, unregistered fund, or ‘person’ without the registrar’s approval. Such transfer must take place within 180 days of the effective date for such transfer to be in force.
The actual payment of the transfer value must be made within 60 days of the registrar’s approval of the section 14 application. Should readers want more information on these types of transfers and various matters on the subject, Circular PF 120 available on the FSB website under Retirement Funds.
Section 14(8) of the Act provides that in the event that both funds are valuation exempt or where one fund is exempt and the other fund is not a registered fund under the Act, nor required to register like the Government Employees Pension Fund (GEPF), then such a transfer can take place without the need to obtain approval from the registrar.
However, such a transfer must also take place within 180 days of the effective date of transfer for the transfer to be in force. For more information please refer to Information circular 6/2007 available on the FSB website.
In the event that the fund will not be able to meet the 180 day period or the 60 day payment periods set out in the Act, then the fund can apply to the registrar before expiry of such period in terms of section 33 of the Act. The registrar will then consider the reasons provided and use his discretion to grant extension.
Section 14(7)(b) of the Act regulates the charging of fees concerning transfers between retirement annuity funds but not charges covering other section 14 transfers.
These will be by agreement between the board of the fund and the administrator and should be contained in the fund’s service level agreement with that administrator.