| (a) | Subject to paragraph (b), the board of every fund that commenced prior to 7 March 2002 shall submit to the registrar a scheme for the proposed apportionment of any actuarial surplus (in this section referred to as the scheme) plus the details regarding any surplus utilised improperly by the employer as defined in subsection (6) as at the effective date of the statutory actuarial valuation of the fund coincident with, or next following, the commencement date. |
| (b) | The board shall submit the scheme not later than 18 months after the effective date contemplated in paragraph (a): Provided that— |
| (i) | if the board elects to apportion actuarial surplus at a date earlier than the effective date of the next statutory actuarial valuation, it may do so if the statutory valuation date is advanced to such earlier date and the registrar is satisfied as to the reasons therefor; |
| (ii) | if the fund is liquidated in terms of section 28 or 29 at a date prior to the effective date of the next statutory actuarial valuation, the effective date of the liquidation shall be the surplus apportionment date; |
| (iii) | if a category of members of the fund is converted from defined benefit to defined contribution and the effective date of the conversion is earlier than the next statutory actuarial valuation date, the effective date of the conversion shall be the surplus apportionment date and a statutory actuarial valuation is required as at such date; or |
| (iv) | if the registration of a fund is cancelled in accordance with section 27 and the effective date of cancellation is earlier than the next statutory actuarial valuation date, the effective date of the cancellation shall be the surplus apportionment date. |
| (a) | shall comply with such conditions as may be prescribed; and |
| (i) | the improvement of benefits to existing members; |
| (ii) | increases to benefits or transfer values in respect of former members; |
| (v) | any two or more of the matters contemplated in subparagraphs (i) to (iv). |
| (3) | The board shall appoint a person to represent the interests of former members in the development of the scheme and such person shall— |
| (i) | identifying former members; |
| (ii) | communicating proposals to former members and to the funds to which former members transferred; |
| (iii) | conveying proposals from former members, and the funds to which they transferred, to the board; and |
| (iv) | collating any objections to the scheme from former members and the funds to which they transferred; |
| (b) | be required to report, in writing to the board, on— |
| (i) | the adequacy of the steps taken by the board to include former members in terms of subsection (4); and |
| (ii) | where it was necessary for the board to apply its discretion with regard to the inclusion of former members and the apportionment of actuarial surplus to such former members, whether or not the exercise of such discretion was reasonable taking into account the demands of equity within the bounds of practicality and the circumstances of the particular fund: Provided that such report must accompany the scheme when it is submitted to the registrar in terms of subsection (9). |
| (4) | The board shall determine who may participate in the apportionment of actuarial surplus, and shall include in such apportionment existing members and any former members who left the fund in the period from 1 January 1980 to the surplus apportionment date: Provided that— |
| (a) | the board may exclude from participation former members in respect of whom the board satisfies the registrar that insufficient records are available to enable the additional benefits that may be due to such former members to be calculated, after the board has taken reasonable steps— |
| (ii) | to construct such records from the records of the— |
| (bb) | any fund to which former members transferred; or |
| (cc) | a trade union or staff association active in the workplace during this period; or |
| (iii) | if the steps in subparagraphs (i) and (ii) do not yield sufficient information, to obtain such records from the potential claimants themselves following an advertisement— |
| (aa) | on a national basis and in the area where the former members used to work; or |
| (bb) | on a more limited basis as approved by the registrar if representations by the fund satisfy the registrar that limited advertisement will be adequate, |
inviting the former members to come forward with evidence to substantiate their claim, after which advertisement the board should wait at least six months but no longer than nine months before excluding any former members because of a lack of sufficient information to enable the calculations to be performed;
| (b) | rather than excluding former members whose individual benefits cannot be determined, the board may set aside a portion of the actuarial surplus in a contingency reserve account explicitly established to satisfy claims of former members in terms of subsection (5)(e). |
| (5) | The board shall apportion the actuarial surplus between the various classes of stakeholders whom the board has determined shall participate in the apportionment in terms of subsection (4) following which such portion as is due to the employer shall be credited to the employer surplus account: Provided that— |
| (a) | the actuarial surplus to be apportioned shall be increased by the amount of actuarial surplus utilised improperly by the employer prior to the surplus apportionment date as determined in terms of subsection (6); |
| (b) | former members shall have the benefits previously paid to them, or the amounts previously transferred on their behalf, increased to the minimum benefit determined in terms of section 14B(2) or 14B(6) as at the date when they left the fund, with such increase adjusted to the surplus apportionment date with fund return over the corresponding period, and pensioners and deferred pensioners shall have their pensions increased to the minimum pension as determined in terms of section 14B(4), as a prior charge on the actuarial surplus to be apportioned: Provided further that, where the actuarial surplus to be apportioned is insufficient to permit such increases after being increased in terms of paragraph (a), the amounts shall be proportioned downwards until the total to be paid to former members, pensioners and deferred pensioners equals the actuarial surplus to be apportioned; |
[Section 15B(5)(b) amended by section 23(a) of Act No. 45 of 2013]
| (c) | after deducting the cost of the increases to former members, pensioners and deferred pensioners in terms of paragraph (b) the balance of the actuarial surplus shall be equitably split between existing members, former members and the employer in such proportions as the board shall determine after taking account of the financial history of the fund: Provided further that the registrar may prescribe certain methods which, if used, shall be deemed to be equitable; |
| (d) | if the amount apportioned to the employer in terms of paragraph (c) is less than the actuarial surplus utilised improperly by the employer as determined in subsection (6), the difference between the amount— |
| (i) | determined in terms of subsection (6); and |
| (ii) | apportioned to the employer in terms of paragraph (c), |
shall represent a debt owed by the employer to the fund and the employer must submit a scheme conforming with the prescribed requirements and repay that debt within a maximum period approved by the registrar;
| (e) | the board shall determine how, in the case of existing members and former members, the allocated portion of actuarial surplus shall be applied for their benefit, including the crediting of any portion to the members' surplus accounts or to the members’ individual accounts, as the case may be: Provided further that the board may allocate a portion of the actuarial surplus to be used for former members to a contingency reserve account which will be used to satisfy the claims of former members— |
| (i) | who have been identified in subsection (4)(a) but who cannot be traced; or |
| (ii) | who did not substantiate their claim during the nine-month period following the advertisement in subsection (4)(a) but who do so after the end of this period; and |
| (f) | the surplus due to any stakeholder as a result of a surplus apportionment scheme approved by the registrar, shall be increased or decreased with fund return from the date determined in line with section 15B(1) until the date the surplus is awarded, paid or allocated. |
| (a) | For the purposes of this subsection— |
"cost" means the difference between the accrued liabilities in the fund as determined by the valuator immediately before, and immediately after, the improper utilisation of surplus: Provided that, where more than one use of actuarial surplus occurred simultaneously, the valuator shall determine how the difference between the accrued liabilities before any of the uses, and the accrued liabilities after all the uses at that date, shall be split between those uses;
"employer" means the employer or employers participating in the fund at the time of the improper utilisation of surplus, determined in accordance with this section, and whom benefited from the improper use: Provided that where a subsequent employer or employers by contract or law became liable for the employee-related liabilities of the previous employer or employers, the subsequent employer is also liable for the apportionment of surplus used improperly;
"selected", in relation to members, means, in the case of a granting of benefits, a group of members to whom the benefits were granted to the exclusion of other members, and, in the case of a granting of benefits conditional on election by the member, a group of members to which the election was granted to the exclusion of other members.
| (b) | The board shall investigate any improper utilisation of surplus by the employer prior to the surplus apportionment date which shall consist of any of the following amounts incurred from 1 January 1980 or since the date of the fund's commencement or such earlier date agreed to by the employer to the surplus apportionment date: |
| (i) | The cost of benefit improvements for executives in excess of the cost that would have applied had the executives enjoyed the benefits provided to other members; |
| (ii) | the cost of any additional pensions or deferred pensions or lump sum benefits granted to selected members in lieu of the employer's obligation to subsidise medical costs of those members after retirement; |
| (iii) | the cost to recognise prior pensionable service for selected members or for members transferred into the fund in excess of any amount paid into the fund in respect of such prior service; and |
| (c) | The board may exclude the following from surplus utilised improperly: |
| (i) | Any use of actuarial surplus which the registrar is satisfied by the members, or by trade unions representing members, after a clear and comprehensive communication exercise occurred as part of a negotiated utilisation of surplus by stakeholders; |
| (ii) | the cost or value of surplus utilised improperly by the employer shall be reduced by any contributions or payments made to the fund by the employer and for such specific purpose; |
| (iii) | for the purposes of paragraph (b)(i), where, in accordance with the rules of the fund, the use for the executive benefit in question has existed in the fund in its current form since inception of the fund or |
| (iv) | such surplus utilised for the purposes of remedying past unfair discrimination if the registrar is satisfied that the surplus utilised improperly was used for such purposes. |
| (d) | The investigation contemplated in paragraph (b) shall— |
| (i) | be conducted at the fund's surplus apportionment date; and |
| (ii) | be carried out by the board irrespective of the fund's financial position at the surplus apportionment date. |
| (e) | Any surplus utilised improperly shall be increased or decreased with fund return from the effective date of the use until the date of receipt thereof by the fund. |
[Section 15B(6)(e) amended by section 23(b) of Act No. 45 of 2013]
| (7) | At least 75 per cent of the members of the board duly constituted in terms of section 7A must approve the scheme. |
| (8) | [Section 15B(8) deleted by section 23(c) of Act No. 45 of 2013] |
| (9) | An apportionment in terms of this section shall be of no force or effect unless— |
| (a) | the scheme, the statutory actuarial valuation as at the surplus apportionment date of the fund, as well as a copy of any other actuarial or other statement taken into account for purposes of the scheme and the report by the person appointed in terms of subsection (3) has been submitted to the registrar; |
[Section 15B(9)(a) amended by section 23(d) of Act No. 45 of 2013]
| (b) | the registrar has been furnished with a certificate signed by the valuator stating— |
| (i) | whether the valuator finds that the process of apportionment complied with this Act; and |
| (ii) | where it was necessary for the board to apply its discretion, whether the exercise of such discretion was not unreasonable taking into account the demands of equity within the bounds of practicality and the circumstances of the particular fund, together with such additional particulars or such special report by the valuator as the registrar may deem necessary for purposes of this subsection; |
| (c) | the registrar has been furnished with such additional report as he or she may require from an independent actuary appointed by him or her on such matters associated with the apportionment of the actuarial surplus as the registrar shall determine and including such information as may be prescribed: Provided that the costs resulting from the appointment of such independent actuary shall be borne by the fund; |
[Section 15B(9)(c) amended by section 23(e) of Act No. 45 of 2013]
| (d) | the fund demonstrates that reasonable measures have been taken to inform employers, members and former members, together with any to which former members transferred, of the scheme in a manner which is clear and understandable to the members and former members and which gives details of the allocation of the actuarial surplus for the benefit of the various stakeholders, including the amounts of any actuarial surplus which it is intended to credit to the member surplus account and to the employer surplus account, respectively, and the costs of any benefit improvements for members and former members: Provided that— |
| (i) | the manner of communication and the type of information to be included in this communication may be prescribed and such prescription may include a requirement that the person appointed in terms of subsection the independent actuary, if any, and the valuator shall certify that they are satisfied that the communication material is objective and contains sufficient information to enable any stakeholder to judge the reasonableness of the scheme; and |
| (ii) | the communication shall be explicit about how and where any complaint should be lodged; |
| (e) | the employer, members, former members, and any to which former members have transferred have had 12 weeks after despatch of the communication in which to complain, in writing, to the board; |
| (f) | the board has considered any objection contemplated in paragraph (e) before submitting the scheme to the registrar; |
| (g) | the principal officer of the fund has furnished the registrar with details of all objections lodged with the board and the actions taken to address such objections; |
| (h) | the registrar is satisfied that the scheme is reasonable and equitable and accords full recognition to the rights and reasonable benefit expectations of existing members and former members in respect of service prior to the surplus apportionment date; and |
| (i) | the registrar has forwarded a certificate to the fund to the effect that the scheme is approved and the requirements of this subsection have been fulfilled. |
[Section 15B(9)(i) amended by section 23(f) of Act No. 45 of 2013]
| (10) | [Section 15B(10) deleted by section 23(g) of Act No. 45 of 2013] |
| (a) | Where a board is not required in terms of subsection (1)(a) to submit a scheme to the registrar, such board shall submit a nil return, together with such additional particulars or reports by the board or other parties as the registrar may deem necessary. |
| (b) | For purposes of this section "nil return" means a written statement by the board, as may be prescribed, including the investigation, existence and details of improper utilisation of surplus contemplated in subsection (6). |
| (c) | The effective date of the nil return is the surplus apportionment date. |
| (d) | The employer, members, former members, and any find to which former members have transferred may within 12 weeks after the date of submission of a nil return object to such return in writing to the board, and a copy of the objection must be forwarded by the board to the registrar. |
| (i) | The board must consider such objections and to the satisfaction of the registrar demonstrate that the objections have been dealt with. |
| (ii) | If the registrar is not satisfied that the objections have been dealt with satisfactorily, the registrar may direct that the nil return be reviewed or a scheme be submitted by the board where the registrar is of the opinion that a scheme is required in terms of this Act. |
| (f) | The nil return shall be submitted to the registrar within 18 months of the fund's surplus apportionment date: Provided that a fund may apply to the registrar in writing to extend the period for such submission. |
| (g) | The costs of submitting a nil return to the registrar shall be borne by the fund. |
| (h) | The registrar may direct the fund to communicate the nil return to members, former members and current employers and may specify the manner in which the communication must take place. |
| (i) | The registrar may prescribe additional requirements for nil returns. |
| (12) | Where the board satisfies the registrar that employers which participate in the fund, on the understanding that their membership, financial position and contribution rates will be separately for each employer and communicated to such employer, the registrar may permit such board to apply this section to the actuarial surplus in respect of the members employed by a particular participating employer as if the corresponding membership, assets and liabilities constituted a separate fund. |
| (13) | The registrar may, on application by the board of a fund and subject to such conditions as may be prescribed, withdraw the certificate issued in terms of subsection (9)(i), in which event the fund shall be deemed not to have submitted a scheme in terms of subsection (1). |
[Section 15B(13) inserted by section 23(h) of Act No. 45 of 2013]
