The Registrar of Pension Funds v British American Tobacco Pension Fund and Others

The British American Tobacco Pension Fund, a closed defined benefit fund, submitted a surplus apportionment scheme under s 15B of the Pension Funds Act 24 of 1956 for approval by the Registrar of Pension Funds. The scheme, relating to an actuarial surplus as at 31 March 2002, was approved by the Registrar in November 2006. Before the scheme was fully implemented, subsequent actuarial valuations (2005, interim 2006, and 2007) revealed actuarial deficits if the surplus allocation was excluded. The Fund used portions of the member and employer surplus accounts, relying on s 15H(1), to reduce the deficit reflected in the 30 September 2007 actuarial valuation report. The Registrar rejected this valuation, contending that once a surplus apportionment scheme is approved, s 15D(2) read with ss 15A(2) and (4) requires surplus credits to be used strictly in accordance with the approved scheme and not to fund deficits. The Financial Services Board Appeal Board upheld the Registrar’s decision. The High Court set it aside on review. The Registrar appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the Gauteng Division of the High Court was set aside and replaced with an order dismissing the Fund’s application with costs, thereby reinstating the decision of the Appeal Board and the Registrar’s rejection of the actuarial valuation.

This case authoritatively clarifies the relationship between ss 15B, 15D, and 15H of the Pension Funds Act. It confirms that once a surplus apportionment scheme is approved, surplus credits are ring-fenced for stakeholders and cannot later be used to fund deficits. The judgment strengthens the protection of members’ and former members’ accrued rights and provides important guidance on actuarial surplus management and the Registrar’s supervisory powers.