Big changes coming for pension funds in South Africa
South Africa’s Cabinet has approved the Conduct of Financial Institutions (COFI) Bill for submission to Parliament.
The bill would mean one of the biggest regulatory shake-ups in decades for South Africa’s retirement fund industry.
This is according to employment law experts Imraan Mahomed and Thato Makoaba from law firm Cliffe Dekker Hofmeyr (CDH).
The firm stressed that the bill marks a major turning point for pension funds, administrators, employers and retirement fund trustees.
The bill also aims to introduce a new system focused on fairness, transparency and accountability across the financial sector.
Cabinet approved the bill on 25 March 2026 after a reform process that had stretched over more than a decade.
The legislation forms a central part of South Africa’s “Twin Peaks” financial regulatory model, where the Prudential Authority oversees prudential regulation and the Financial Sector Conduct Authority (FSCA) supervises market conduct.
CDH said the bill proposes a single, comprehensive framework for regulating the market conduct of all financial institutions in South Africa, including banks, insurers and retirement funds.
The law firm noted that one of the biggest changes is the shift away from a highly prescriptive regulatory framework toward a principles-based system.
Under COFI, financial institutions will no longer need to comply with rules on paper alone. They will also need to demonstrate that their actions deliver fair outcomes for customers in practice.
“Importantly, COFI adopts a principles-based, activity-based and outcomes-focused approach,” CDH said.
For retirement funds specifically, the bill introduces a new conduct-focused regulatory layer that will operate alongside existing pension legislation.
While the Pension Funds Act will remain in place to govern structural and prudential matters, conduct-related requirements will increasingly fall under the COFI framework.
As part of the reform, South Africa’s Pension Funds Act will also be renamed the Retirement Funds Act.
Another major shift is that retirement funds will no longer operate under a simple registration system. Instead, all funds will need to obtain a formal COFI licence from the FSCA to continue operating.
Existing funds will have a three-year transition period from the date the law comes into effect to secure the required licence.
More powers given to the FSCA
The bill also significantly expands the FSCA’s oversight powers. Public sector retirement funds, including those linked to the state, municipalities and provincial entities, will now fall fully within the regulator’s mandate to ensure consistent member protection across all sectors.
CDH said the legislation introduces stronger governance requirements for retirement fund boards and tighter standards for trustees and other key individuals.
The bill will also strengthen democratic governance and accountability through greater member representation.
Employers participating in retirement funds are also set to face closer scrutiny. Under the COFI Bill, participating employers will be classified as “supervised entities”, allowing the FSCA to directly oversee employer-related conduct.
CDH said this is particularly important in tackling contribution non-payment, which has long posed a major threat to workers’ retirement savings.
The legislation will also add South Africa’s Treating Customers Fairly (TCF) principles to retirement fund regulation.
According to CDH, where financial institutions provide services to retirement funds, customer protections will extend directly to fund members themselves.
The bill also seeks to prevent “unreasonable post-sale barriers” that may make it difficult for members to transfer or switch products.
Retirement fund administrators will also face major changes. Administrators will need to obtain COFI licences, replacing the current registration regime under section 13B of the Pension Funds Act.
The bill further distinguishes between third-party administration and own-fund administration, reflecting COFI’s activity-based regulatory approach.
Although Parliament may still amend aspects of the bill during the legislative process, CDH said the overall direction of reform is already clear.
“Trustees, administrators and employers should begin familiarising themselves with COFI’s core principles. These principles include fairness, transparency and accountability,” the firm said.
“They should also familiarise themselves with how these will affect governance arrangements, compliance frameworks and operational practices.”
CDH added that industry stakeholders should also participate in the parliamentary process once the bill is formally tabled to ensure sector-specific concerns are properly addressed.
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