RisCura Fund Services

Getting to grips with Regulation 28

Recent amendments to Regulation 28 of the Pension Funds Act are fundamental in nature, and place very complex reporting and compliance obligations on Trustees of retirement funds. It is critical that Trustees fully understand these obligations and develop strategies and systems to ensure compliance with the Regulation.

Key changes to Regulation 28

Key changes to Regulation 28 as it relates to reporting for regulatory compliance purposes are:

• Member level compliance with Regulation 28
• Funds must report on a quarterly basis and must address the daily compliance position of their members
• The underlying assets in any portfolio must be identified through the application of the look-through principle
• The recognition of hedge funds and private equity as separate asset classes
• There must be daily compliance with Regulation 28, not just at a point-in-time
• The embodiment of the principle of liability driven investing

Key challenges arising from the changes to Regulation 28

Trustees will need to:

• Assess the current level of compliance of the Fund and its members with Regulation 28
• Develop a plan to map out the route to becoming compliant should this be required
• Apply for exemptions where and if necessary
• Establish systems to monitor compliance on an ongoing basis

RisCura's Regulation 28 Compliance Report

RisCura has built the necessary relationships with asset managers who provide us with data feeds. This allows for rapid assessment of current levels of compliance, as well as the ongoing compliance monitoring and quarterly reporting obligations of funds. We have developed a proprietary system that is flexible, robust and proven.

We gather the necessary data on a monthly basis directly from the asset managers and market data providers. We believe this is the most efficient and cost effective way to fulfill the reporting obligations of retirement funds.

The result is an easy-to-follow report that highlights areas of concern.

RisCura’s Regulation 28 process

• We obtain details of all Fund holdings and transactions, on a look-through basis, from the Fund’s asset managers
• Where applicable, we obtain from the Fund’s unitisation service provider details of member ownership of each asset manager portfolio
• We reconcile this data to check the daily holdings files for the Fund and, where applicable, each member-choice product
• We evaluate each investment instrument to determine whether all information fields required for competent and consistent classification are included in our database
  • For unlisted investment instruments, we obtain all data from the asset manager
  • For listed instruments, we obtain market related information directly from market data providers
• We classify all investment instruments into the correct Regulation 28 categories and carry out a checking process to ensure consistency and accuracy
• We conduct a daily compliance check at Fund level and, where applicable, member-choice level
• We report on compliance at each level to the Fund
• We facilitate transmission of the reports to the FSB on the Fund’s behalf

Please get in touch to discuss how we can assist your Fund in meeting its training, compliance and reporting requirements. Contact René Swart on
+27 (0) 21 673 6999 or email reg28@riscura.com for more information.