RETIREMENT MATTERS 2 OF 2026
Conduct of Financial Institutions Bill 2026 update
The Conduct of Financial Institutions Bill 2026 (the COFI Bill) has been introduced in the National Assembly on 1 April 2026, and an explanatory summary was published.
A copy of the COFI Bill will become available once tabled in Parliament and there will be a public commentary period.
National Treasury indicated that Parliament will be requested to provide an extended comment period due to the size of the COFI Bill and the fact that the last available version dates from 2022. This will however be at Parliament’s discretion.
Financial Sector proposed levy increase
Comments were invited by 8 July 2026 on proposed amendments to the Financial Sector and Deposit Insurance Levies Act for the 2026/27 financial year. These will result in a modest increase of approximately 3.2% in FSCA levies for most supervised entities, including retirement funds. As FSCA levies increase, the Ombud Council levy (set at 2.5% of the FSCA levy) will also rise automatically.
However, retirement funds are specifically impacted by a significant proposed increase in the Office of the Pension Funds Adjudicator (OPFA) levy.
- The per-member levy increases by 15%, from R10.84 to R12.46.
- The base amount remains R0.
- No cap applies to the OPFA levy.
- The levy applies to active members and pensioners receiving regular payments (excluding unclaimed benefits).
This increase is intended to support the OPFA’s growing operational demands, including higher case volumes and technology improvements.
No levy increases are proposed for the Ombud for Financial Services Providers (FAIS Ombud) or the Financial Services Tribunal.
Financial Sector Conduct Authority
FSCA Q1 2026 Newsletter
The June 2026 FSCA Newsletter, which covers updates on retirement fund supervision, crypto asset service provider licensing, sustainable finance, ESG ratings, and financial health in South Africa, was published.
The Retirement Fund Supervision Department’s 2026/27 deliverables reflect a dual supervisory focus on ensuring rigorous oversight of active retirement funds while also addressing the efficient resolution of backlogs in terminating and liquidating funds. A key priority is the publication of a comprehensive statistical report on the retirement fund industry by 31 March 2027, which will include data on ESG practices, transformation metrics and an analysis of the impact of the two‑pot retirement system on preservation rates.
This indicates the FSCA’s forward focus on:
- Preservation outcomes under the two‑pot retirement system and whether early access is undermining retirement savings;
- ESG and sustainable investment practices, including how funds are implementing responsible investment strategies;
- Transformation within the industry, including governance structures and stakeholder representation; and
- The overall financial health and long‑term outcomes of members, rather than purely compliance with rules.
The emphasis on preservation data signals potential future regulatory intervention where member withdrawals materially erode retirement adequacy. Overall, the FSCA is positioning its supervision to focus not only on compliance, but on measurable member outcomes, system sustainability, and industry behaviour over time.
FSCA Regulation Plan 2026-2029
The FSCA published its Regulation Plan for the period 1 April 2026 to 31 March 2029 on 3 July 2026.
The Plan outlines the FSCA’s regulatory priorities, focus areas, and intended outcomes for the next three years and provides guidance on how the FSCA intends to fulfil its objectives and perform its regulatory and supervisory functions.
The following is noteworthy:
- COFI Bill implementation remains a key priority. The FSCA will continue supporting the Parliamentary process while advancing transition planning and consultation on the themed frameworks that will underpin the future conduct regulatory framework. Current focus areas include fit and proper requirements, governance, risk management, internal controls, and complaints management.
- The Plan reflects the FSCA’s continued readiness for the implementation of the COFI Bill through the progressive development of the market conduct framework that will support the future legislative and regulatory regime.
- Development of a number of cross-sector regulatory frameworks will continue, including joint standards relating to governance, outsourcing, operational resilience, and beneficial ownership transparency.
- Regulatory reform initiatives in the areas of retirement funds, with PF Circulars 86 and 90 likely to be incorporated into the COFI Disclosure Themed Framework and Directive 8 into developing governance frameworks, although no final decisions have yet been made.
- In view of the significant regulatory resources being directed towards the COFI transition and related reforms, the 2026 Regulation Plan limits the introduction of new regulatory projects where possible.
Overall, the Plan confirms the FSCA’s continued focus on the implementation of the COFI Bill, strengthening market conduct regulation, developing cross-sector regulatory frameworks and progressing key financial sector reform initiatives over the next three years.
Prudential Standard on the Regulation 28 Quarterly Reporting Requirements
The FSCA has on 1 July 2026 published Prudential Standard 2 of 2026 (RF): Regulation 28 Quarterly Reporting Requirements for Pension Funds, together with the supporting Statement of Need and Impact and Consultation Report.
The new Prudential Standard introduces enhanced quarterly reporting obligations for retirement funds relating to:
- Non-compliance with Regulation 28; and
- Assets held in terms of Regulation 28.
The Standard moves away from the current exception/non-compliance quarterly reporting model to a holistic positional reporting approach. It enables boards of management to proactively monitor compliance with Regulation 28 and to take timely corrective action.
The Standard will repeal and replace Prudential Standard 1 of 2024: Regulation 28 Quarterly Reporting Requirements for Pension Funds, which was published on 1 April 2024, which prescribes non-compliance reporting.
The Standard sets out what information must be reported, but the FSCA will issue a separate determination prescribing the detailed reporting methodology, submission format, and reporting requirements.
The Standard does not yet have an effective date. The FSCA has indicated that implementation remains dependent on:
- Finalisation of the reporting determination;
- FSCA system developments; and
- Providing sufficient implementation lead time to the industry.
The effective date will be determined by the FSCA following further engagement with industry stakeholders and will be communicated via publication on the FSCA website.
Publication of the 2026 draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill
Comments have been invited on the 2026 draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (2026 draft Rates Bill) on 4 June 2026 with a deadline of 26 June 2026.
National Treasury and SARS published the 2026 draft Rates Bill 2026 already on 25 February 2026 with the National Budget review. The 2026 draft Rates Bill contains, amongst others, details of adjustments to the various tax thresholds, exemptions, and limit amounts.
In terms of the Income Tax Act, tax rates proposed through the National Budget review in a Rates Bill, will be implemented notwithstanding the fact that it has not been promulgated (to allow 12 months to pass legislation).
The amendments relating to the adjustment of the retirement de minimis to R240 000 and the contribution tax deductibility up to R430 000, therefore already apply from 1 March 2026.
Q: May a life or living annuitant, whose value in their fund or provider becomes less than R240 000, opt to take the remaining value as a lump sum?
A: No
- The de minimis amount of R240 000 does not apply to existing pensioners with existing life (conventional) or living annuities.
- Existing life annuities: The opportunity to commute a pension for a lump sum arises on retirement from the fund and therefore the de minimis is determined at the date when the pension commences. This means that a person cannot commute their pension for a lump sum if the value of their benefit falls below a certain amount after their pension commenced.
- Existing living annuities: The definition of living annuity in the Income Tax Act specifically deals with commutation of a living annuity. It provides that the full remaining value of the pension may be paid in a lump sum when the value at any time becomes less than the amount prescribed by the Minister of Finance. The amount was last prescribed by the Minister in the Government Gazette on 23 March 2026 as R150 000 (with effect from 1 March 2026).