Pension Funds Act, 1956 (Act No 24 of 1956)RegulationsPart VII : General35. Establishment of Contingency Reserve Accounts |
| (1) | By virtue of the fact that— |
| (a) | the Act vests powers in boards of funds to establish contingency reserve accounts; and |
| (b) | the establishment of contingency reserve accounts reduces the actuarial surplus available for apportionment and increases the possibility that actuarial surplus may be insufficient to enhance benefits previously paid to former members to the level prescribed in section 15B(5)(b) of the Act, |
no fund may, with effect from the date of commencement of this regulation, establish any contingency reserve account under circumstances where a reasonable inference may be made that the establishment of the account is contrary to the duties of the relevant board under section 7C(2)(b) of the Act and motivated by bad faith.
| (2) | The establishment and magnitude of any contingency reserve account by a fund— |
| (a) | must be motivated by the valuator in the relevant report on the statutory actuarial valuation; and |
| (b) | may, where the Registrar is not satisfied with any such motivation, be rejected by the Registrar. |
| (3) | A fund must, on any such rejection of the establishment or magnitude of the relevant contingency reserve account, take such steps in connection therewith as the Registrar determines and sets out in writing to the relevant fund. |
| (4) | Where a board is able to determine the enhancement due in respect of a particular former member in terms of section 15B(5)(b) or (c) of the Act, but is unable to trace that former member in order to make payment, the board shall put the corresponding enhancement into a contingency reserve account specific for the purpose. Notwithstanding anything in the rules of the fund, moneys may not be released from such contingency reserve accounts except as a result of payment to such former members or as a result of crediting the Guardians Fund or some other fund established by law to include such amounts. |
[Regulation 35 inserted by Notice No. 558 of 2003]