Even though Defined Benefit (DB) pension plans are being phased out worldwide, countries like the USA, UK and the Netherlands have a fair amount of DB pension plan liabilities and hence the need for supervision of these plans. In the South African retirement fund landscape, a fair amount of DB pension plan liabilities exist, and the supervision of these plans must be brought in line, as far as it is practical and relevant, with international standards.

The author intends to present a case study on the South African experience as viewed from a prudential supervisory perspective. An overview of the DB pension landscape will introduce the presentation and brief comments will be made about the surplus legislation which was promulgated during late 2001 in terms of which pension plans had to distribute large actuarial surpluses which had accumulated over the years, in stark contrast to many other countries where DB pension plans were experiencing funding crises.

South Africa is now in the post-surplus era and the need arose, in line with international practice, to develop prudential supervisory tools by which DB pension plan liabilities can be regulated efficiently. The presentation will cover the options and suitability thereof within the South African context, and draw on inferences made from acceptable international standards, such as those published by the International Organisation of Pensions Supervisors. In addition, feedback will be provided on the South African DB pension plan experience since the introduction of a more robust supervisory framework with the aim of efficiently regulating these plans going forward and encouraging longterm sustainability.