Over 20 years of pension savings down the drain
While the initial two-pot withdrawal applications first exposed roughly 3,000 to 5,000 defaulting employers, the latest data from the Financial Sector Conduct Authority (FSCA) show the problem has deteriorated significantly.
The FSCA reported earlier this year that pension contribution arrears have climbed to R8.33 billion, affecting approximately 590,000 retirement fund members.
In some of the most severe cases, workers have had pension contributions deducted from their salaries for over 20 years without the money ever reaching their retirement funds.
The FSCA’s latest list of non-compliant employers names 6,064 companies reported for failing to meet their obligations under section 13A of the Pension Funds Act.
This legislation requires employers to pay pension contributions to the relevant retirement funds within prescribed timeframes.
The latest publication forms part of the regulator’s ongoing effort to name and shame employers that fail to comply with the law. It is the fifth such communication since the initiative began in June 2022.
The FSCA said the disclosures are intended to promote transparency and alert affected retirement fund members and other stakeholders to potential problems.
“This is critical in supporting the FSCA’s ongoing efforts to protect retirement fund members and promote regulatory compliance across the sector,” it said.
The number of reported employers has increased substantially over the past three years.
The regulator identified 5,430 employers in April 2023, compared with 16,556 employers across 75 funds as at 28 February 2026.
The latest reported arrears of R8.33 billion represent an increase of R1.04 billion, or 14.2%, from the R7.29 billion recorded in March 2025.
One of the most concerning aspects is how long some of these debts have remained unpaid. Late payment interest now accounts for 43.5% of total arrears, amounting to more than R3.6 billion.
The FSCA reported that interest had increased by 21.5%, compared with a 9% increase in the capital portion of outstanding contributions.
This means that employers are allowing pension debts to accumulate over extended periods rather than resolving them.
Arrears stretch back 15 to 20 years
The introduction of the two-pot retirement system in September 2024 helped expose the extent of the problem.
Previously, many employees only discovered that their pension contributions had not been paid over when they resigned, retired or were retrenched.
The new system allowed workers to access a portion of their retirement savings while remaining employed, bringing previously hidden contribution defaults to light.
Financial disclosures and regulatory records have highlighted cases involving financially distressed municipalities where pension contributions were deducted from employees’ salaries but not transferred to retirement funds.
Some municipal arrears reportedly stretch back 15 to 20 years, with cash-strapped councils prioritising operational expenses, electricity and water accounts, and supplier payments over their pension obligations.
Bargaining council funds covering industries such as security, manufacturing, transport, cleaning, retail and textiles represent another significant source of unpaid contributions.
These industries account for 76.9% of the reported arrears, while local government accounts for approximately 21.5%.
In some cases, employers registered workers with retirement funds but subsequently stopped making payments or paid contributions inconsistently, despite continuing to deduct employees’ portions from their salaries.
Trade unions, including the Public Servants Association (PSA) and COSATU, have condemned defaulting employers and local councils.
“Deducting hard-earned funds from employees’ paychecks without transferring them to benefit funds is not merely administrative delay—it is outright wage theft and fraud that ruins lives when workers need their safety net most,” the PSA said.
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