25 years of pension savings down the drain
More than 15,500 employers in South Africa owe nearly 600,000 workers R7.29 billion in unpaid pension fund contributions, with some companies failing to pay into retirement funds for over 25 years.
The Financial Sector Conduct Authority (FSCA) revealed this in its latest update, highlighting the widespread noncompliance with the Pension Funds Act.
The FSCA said in a statement on 25 September that it has published the names of 5,830 employers that broke the law by failing to pay contributions as required under the Act.
“As at 31 March 2025, the FSCA received reports of 15,521 employers in contravention of Section 13A of the PFA. Of these, 5,821 employers have been published due to the severity and duration of their arrears,” the regulator said.
According to the FSCA, 5,671 employers owe more than R50,000 in contributions that have been overdue for at least five months, while 80 employers also owe more than R50,000 but have not provided a date for their last payment.
A further 79 employers owe less than R50,000 in contributions but face late payment interest charges above R50,000, and they have been overdue for more than five months. Seventeen employers only owe late payment interest.
“This represents a 50% increase in non-compliant employers since December 2023,” the FSCA said.
The spike is mainly due to the inclusion of two of the country’s most significant retirement funds, the Auto Workers Provident Fund and the Motor Industry Provident Fund.
These funds account for over half of the employers on the list. The arrears now total R7.23 billion, with R2.98 billion of this being late payment interest.
Even when employers settle overdue contributions, the FSCA warned, many don’t pay the full interest, leaving retirement funds short.
Some of the arrears stretch back decades. While 43% of employers are behind by less than two years, the average across all sectors is four years.
Problem further exposed by two-pot retirement system
The average in local government is nearly six years. Shockingly, some companies have failed to pay contributions for 304 months, just over 25 years.
FSCA Commissioner Unathi Kamlana stressed how serious this misconduct is.
“When contributions are deducted from salaries, but not remitted to the relevant funds, it constitutes a serious breach of fiduciary and ethical responsibility,” he said.
“Such conduct not only undermines and erodes trust, it may also amount to financial misconduct, maybe even criminal fraud, which should attract severe consequences.”
The problem has been further exposed by the introduction of the two-pot pension system in September 2024, which allows workers to access part of their savings early.
“When some employees sought to access funds in their savings accounts, they discovered to their shock that their employers had not been paying regular contributions to retirement funds, leaving them with nothing to access,” Kamlana said.
The FSCA added that in some cases, the issue is not complete non-payment, but incorrect contribution rates being applied.
For example, paying 18% instead of 20% of pensionable salary when contracts change. Still, the effect is the same: workers lose out.
Kamlana said he is hopeful that the situation will improve in the next 18 to 24 months with the enactment of the Conduct of Financial Institutions Bill. “The law will bring employers who pay retirement contributions under our supervision,” he said.
The FSCA also credited the National Treasury for helping to recover millions owed to workers by forcing municipalities to make third-party payments before receiving their equitable share allocations.
“We acknowledge and appreciate the intervention of the National Treasury,” the regulator said. The FSCA has made it clear that it will continue to push for accountability.
“The interests of retirement fund members must be protected, and those who compromise them must face consequences.”
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